gordons llp plastic packaging tax

Plastic Packaging Tax: What is it and How to Prepare for 1 April 2022

Monday 21st March 2022

From 1 April 2022 the Plastic Packaging Tax (General) Regulations 2022 will introduce a new plastic packaging tax (PPT) on plastic packaging manufactured in or imported into the UK which does not contain at least 30% recycled plastic.

Subject to exemptions and specifications, the Plastic Packaging Tax will be applied to businesses that import or manufacture more than 10 tonnes of ‘finished’ plastic packaging per year, at a rate of £200 per tonne of plastic packaging.

Why has PPT Been Introduced?

PPT is primarily an environmental measure. The aim is to increase demand for recycled plastic waste and to divert it from landfills. It is hoped that a tax on plastic packaging will provide a financial incentive for businesses to combat the use of single-use plastics, encourage the use of recycled plastics and drive the development of recycling technologies in the UK.

How is PPT Calculated?

Any qualifying businesses will be required to calculate the total amount of plastic in their packaging. Where the plastic packaging contains multiple materials, but more plastic by weight than any other material, it will be considered plastic packaging for the purpose of the tax. Where 30% or more of the plastic which forms the packaging is recycled, the packaging will not be chargeable for PPT.

All packaging is assumed to be made of non-recycled plastic unless there is evidence otherwise. Therefore all eligible businesses, even those without chargeable packaging, should keep records of the substances included in their packaging to evidence their PPT status.

What do Businesses Need to do to Prepare?

Any businesses which have manufactured or imported 10 tonnes of plastic packaging within the last 12 months, or which will do so in the next 30 days, will need to register for PPT. This is regardless of whether the packaging produced or imported is chargeable. Registration opens on   1 April 2022.

Businesses liable to pay PPT should consider whether and how to pass that cost to customers. When entering into new contracts, businesses should make clear whether pricing will be inclusive or exclusive of PPT. There is also a limited right to increase prices in existing contracts to account for the cost of PPT, should the packaging become chargeable or the PPT due increases.

PPT has wider implications for other businesses in the supply chain too. Not only will they need to prepare for potential cost increases, but they can also be made secondarily or jointly and severally liable for any failure to pay PPT where they know or ought to know it has not been paid. Secondary liability can apply to numerous businesses, including those involved in the transport or storage of the products, or businesses operating online marketplaces. All businesses affected should therefore ensure they carry out thorough due diligence checks to ensure the integrity of their supplier and should consider how to address PPT in their supplier contracts.

For advice on changes posed by the Plastic Packaging Tax please contact Lauren Wills-Dixon or one of our other Retail Experts.
If you’re a retail business in the UK, stay up to date with the latest legal and regulatory changes on the horizon with our 2022 Retail Snapshot here.