Tax on plastic packaging & who is liable

The plastic packing tax is a rather new tax that came into effect on 1 April 2021. It was introduced to reduce the amount of plastic packing that doesn’t contain at least 30% of recycled plastic and this way supports the green agenda outlined by the government for a greener world.

Who is liable?

This tax applies to the packing that is predominantly6 made from plastic (by weight) and that plastic doesn’t contain at least 30% recycled plastic (also by weight). The tax is levied on those who manufacture or import plastic packaging. The tax arises when the packaging component is finished, or where it is imported, when it is imported.

However, it only applies to those to those who manufacture or import at least 10 tonnes of plastic packaging within the scope of the tax each year. If the tax applies, then the charge is £200 per tonne. More guidance on the plastic packaging tax can be found on the government website. 

How to register

Manufacturers and importers who are liable for the tax need to register with HMRC (from 1 April 2022) online. A business must register when they have manufactured or imported 10 or more tonnes of plastic packaging within the scope of the tax, or if they plan to do so in the next 30 days. 

When determining whether a liability to register occurs, it is necessary to look to the past and present. As the tax only applies from 1 April 2022, in the first year of the tax, there is no need to look back before that date. Where the threshold of 10 tonnes in the previous 12 months is reached, the liability to register arises from the first day of the month in which that threshold was reached. Registration must be done within 30 days.

Examples

1) The business manufactures 4 tonnes of plastic packaging containing less than 30% recycled plastic each month. By 30 June 2022, they have manufactured 12 tonnes of packaging since 1 April 2022. As the 10-tonne threshold has been exceeded on 30 June 2022, the liability to register arises on 1 July 2022. The business must register by 30 July 2022.

Where a business expects to exceed the 10-tonne threshold in the next 30 days, the requirement to register arises from the date that the business expects to be liable to register. Again, the business must register within 30 days.

2) The business normally manufactures 2 tonnes of plastic packaging a month. On 4 May 2022, it receives an order for 15 tonnes of plastic packaging that contains less than 30% recycled plastic. The liability to register arises on 4 May 2022 and the business must register by 2 June 2022.

Planning tips

The tax is being paid by the manufacturer or importer, and not by the end-user. However, depending on price sensitivity, they may be able to pass the cost on to them. 

As this tax only applies where the plastic packaging does not contain at least 30% recycled plastic, increasing the recycled element to at least 30% will remove this liability. Likewise, moving away from plastic packaging so that the 10-tonne threshold is not breached will also take a business outside the tax, increasing its green activities in the process.