When the UK Government introduced PPT in April 2022, the aim was to encourage the use of recycled plastic within packaging. PPT should be considered by all businesses who either manufacture plastic packaging in the UK or import it into the UK. Recent HMRC data reveals that PPT has raised a total of £263 million through the first 10 months of the scheme, exceeding HMRC targets.
Has your business considered whether it has any PPT obligations?
HMRC expect as a minimum that all businesses understand whether they have any plastic packaging in their supply chain and if there is, ensure that it is documented as to who has the reporting and payment obligations.
Recent changes and what can we expect next?
From 1 April 2023 the PPT rate has increased to £210.82 per tonne.
A technical consultation recently took place in May 2023 to consult on draft regulations which amend how a business claims a Plastic Packaging Tax credit in certain circumstances. The regulations are expected to be implemented from 1 July 2023.
The UK government has also said it will consult later this year on reforming the PPT to encourage investment in chemical recycling. It seems likely that there will be simplifications to the PPT regime by using a ‘mass balance’ approach to calculate the percentage of chemically recycled content included in plastic packaging.
It was previously expected that businesses would be required to include a relevant statement with their invoices to show that PPT had been paid but this requirement has been delayed. Instead HMRC have said that you are encouraged to make the PPT you have paid visible to your business customers, and work with them to try and increase the amount of recycled plastic they use wherever possible.
Reusable plastic crates and transport packaging
HMRC recently updated guidance about exemptions for reusable plastic crates and transport packaging when imported into the UK filled with goods. The exemption applies to pallet wrap and straps when used to import goods but all packaging imported unfilled into the UK is still subject to PPT.
PPT across the globe
Other countries (e.g., Spain) have also recently introduced plastic packaging taxes whilst others still have these at proposal stage (e.g., Italy).
ESG and Tax
It is important that businesses keep up to speed with the ever-changing tax and regulatory landscape both in the UK and abroad. Getting ESG right should drive value creation and manage risk. Getting it wrong could expose a business to significant risk and lead to dissatisfied stakeholders.
Companies with high environmental impact may face increased scrutiny from tax authorities including enquiries. For businesses that are readily embracing ESG and that are innovators in this area they may be able to benefit from making R and D claims which could produce significant additional value. Any ESG initiatives and the value associated with these should also be considered by International Groups when looking at their transfer pricing models.
For more information on PPT please contact your usual Menzies contact or Emma McCartney. For more general ESG guidance Menzies have a specialist consulting team available to help you, visit the link below: