What is the Plastic Packaging Tax, and will it impact me?

by | Oct 27, 2021

The Plastic Packaging Tax (PPT) is a tax on plastic packaging produced in, or imported into, the UK, that does not contain at least 30% recycled plastic.

The new tax will come into effect from the 1st April 2022. From this date companies that produce or import (either filled or empty) more than 10 tonnes of plastic packaging over a 12-month period will be liable for a tax of £200 for every tonne of packaging made from less than 30% recycled plastic.

 

What counts as ‘plastic packaging’?

 

Plastic packaging is defined as packaging that is predominately plastic by weight. Products will be subject to PPT if they are designed as single use packaging products for use by a consumer and contain any commodity or waste.

 

In terms of the hair and beauty sector, this will apply to:

  • Primary Packaging:

Bottles / Jars / Tubes etc.

  • Dispensers:

Pumps / Nozzles / Sprayers

  • Tamper Seals or Caps
  • Secondary Packaging:

Boxes, Giftpacks, Vac Trays etc.

  • Distribution Materials:

Polybags, Overbags

The tax will be calculated per component of plastic packaging. In the case of a glass jar with a plastic lid, the lid is treated as a separate component. In a bottle of moisturiser, the bottle and dispenser are classed as separate components that would need to be recorded separately.

 

In the UK supply chain, the tax is applied in the first instance to the packaging manufacturer. There is a secondary liability clause, meaning that if the tax has not been paid by the manufacturer, the tax can be passed down to other stakeholders in the supply chain (e.g. the brand owner or product manufacturer). HMRC is due to give more guidance on this shortly.

 

Are there any exemptions?

 

Businesses will not be liable for the tax if they:

  • produce or import less than 10 tonne of plastic packaging in a 12-month period, however they will still be required to register and record data under the new PPT requirements;
  • their plastic packaging contains 30% or more recycled plastic content;
  • their packaging is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight (e.g. an aluminium tube with a plastic coating).

 

The following plastic packaging products are also exempt from PPT:

  • packaging for use in the immediate packaging of licensed human medicines;
  • transport (transit) packaging used to wrap imported goods (e.g. pallet wrap);
  • packaging used for goods in international journeys which are not released into the UK;
  • packaging that is going to be exported out of the UK within a year;
  • components for non-packaging or durable applications e.g. first aid boxes.

 

Despite these exemptions, businesses with products that fall within these categories will still be required to register and record data under the new PPT requirements.

 

What records do I need to keep?

 

Any business that manufactures or imports plastic packaging will need to keep records of the packaging they manufacture or import. Plastic packaging is assumed to not meet the recycled content test unless it can be proven otherwise.

 

The Government intends that record keeping requirements will be reduced for businesses that fall under to 10 tonne threshold, however they will still need to keep some records. Further information will be published by Government in the coming months.

 

Records should show:

  • the total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging, excluding packaging which is used to transport imported goods (e.g. pallet wrap);
  • the data and calculations used to determine if a packaging component is, for the most part plastic, and how much recycled plastic it contains;
  • the weight of exempted plastic packaging and the reason for the exemption;
  • the amount in weight of plastic packaging exported, and therefore the allowed relief from the tax (packaging being exported out of the UK within 12 months is exempt).

 

Businesses will need to ensure they have adequate evidence to defend their filings including adequate supply chain due diligence, even where no tax is due, and effective sampling procedures where appropriate.

 

Records will be required quarterly. Businesses which are members of a group of companies will be able to appoint a representative member to submit returns and pay the tax on behalf of the collective group.

 

When do I need to register and pay the tax?

 

If you are a business that manufactures or imports 10 or more tonnes of plastic packaging (including that which is more than 30% recycled or otherwise exempt) over a 12-month period, you will need to register for the tax. This is required regardless of whether you will have to pay any tax.

 

The online service to register and pay will be available on 1 April 2022 when the tax takes effect.

 

Businesses based outside of the UK must also be registered and pay the tax if they import plastic packaging into the UK.

 

Find more information here about registering for Plastic Packaging Tax.

 

Am I liable for tax on existing packaging stock?

 

The tax will apply to any packaging produced or imported after 1 April 2022. Therefore, stocks of finished materials produced before April would not be liable.

 

We are awaiting clarification on whether businesses would be liable in instances in which imported packaging was manufactured before 1 April but delivered into the UK after that date.

 

What can I do to prepare?

 

There is still much more information to come from Government to help businesses implement the requirements of the PPT. In the meantime, however, businesses can begin to prepare by:

  • Assessing their supply chain to determine who is affected, who is the responsible party, and any required amendments to contracts and pricing.
  • being aware of the different types of plastic which go into their packaging and looking into more sustainable alternatives where possible;
  • factoring in costs associated with the implementation of the PPT, such as training staff, developing the necessary reporting framework to complete tax returns, and keeping appropriate records;
  • communicating the coming changes to customers and suppliers;
  • reading up on the new requirements on the Government website.

 

The British Beauty Council will continue to update businesses on the Plastic Packaging Tax as further information becomes available.

 

Update, April 2022:

  • Plastic packaging containing less than 30% recycled plastic is taxed at £200 per tonne. Once you become liable for PPT, you will need to keep accounts and records to use as evidence when you complete your quarterly tax returns for PPT.
  • Businesses will not need to file a Plastic Packaging Tax (PPT) return or pay the tax before July ‌‌2022 at the earliest, however you may need to register before this point.
  • If you are over the registration threshold and already include 30% or more recycled plastic material in your plastic packaging, you still need to register but will not pay any tax. There are two tests to check if you need to register.
  • You must register for PPT if you have manufactured or imported 10 or more tonnes of plastic packaging since 1 April 2022, or if you expect to manufacture or import 10 or more tonnes in the next 30 days.
  • PPT has a 10-tonne registration threshold. There is guidance outlining information on what plastic packaging must be included within the 10-tonne threshold as well as examples of how to test and calculate your product packaging.

 

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