UK polymer distributor Plastribution has created a handy new resource to help manufacturers make sense of the Plastic Packaging Tax, which will come into force in spring 2022.
The Plastic Packaging Tax will come into action in April 2022. It will be a tax of £200 per tonne on all plastic packaging that does not contain at least 30% recycled content.
The government has released some guidance documents on the packaging tax:
This is a general overview of the packaging tax and the likely changes companies will have to make.
A more detailed look that covers a lot of the definitions within the tax and specific information on things like required documentation.
The information below is Plastribution’s interpretation of this guidance and reading sections of the Finance Bill 2021. Below is a summary from Plastribution on some of the more commonly asked questions around the tax, but it’s recommended that you use the government website as your primary source of information.
What will be taxed?
Any packaging or packaging components that are predominantly made of plastic (by weight) and do not contain at least 30% recycled content.
What will be exempt?
- Packaging for licensed medicines (but not for medical equipment).
- Packaging used as aircraft, ship, and rail stores for international journeys.
- Businesses producing or importing less than 10 metric tonnes of packaging (however, you will still need to keep records).
- Tertiary packaging (pallet wrap etc.) being imported.
- Food packaging is NOT exempt!
How much will the tax be?
Though not fully confirmed, the tax is currently set at £200 per tonne. This has not changed throughout the consultation stages and is likely to be the final figure.
Who is liable for the tax?
Currently, the point that the tax is applied is at the last substantial modification, before the packaging or component is ready to be used or packed/filled.
Below are some specific examples:
- If you produce a bottle top ready to be placed on a bottle, you will be liable to pay the tax.
- If you produce the preform for a bottle, this will not be liable for the tax.
- If you are importing a barrier film to be used in a multilayer film, you will not be liable for the tax
The term ‘substantial modification’ is likely to be defined further. Currently, it is defined as a product or item that is ready to be filled or used.
One interesting clarification in the 2021 Finance Bill is that if a substantial modification is made during packing or filling, it is the last modification made before the packing or filling.
Can you reclaim on the tax?
Yes, if you pay the tax and the item is exported or used for a non-packaging application, then it is possible to reclaim the tax. Only the original taxpayer will be able to reclaim. You may also be required to share various documentation and evidence from your supply chain.
I know that the packaging will be exported; do I need to pay the tax?
If you know the packaging you produce will be exported, you can defer the tax for 12 months. You will need evidence that the material has been exported to remove the volumes from payable tax.
How is recycled content assessed?
This is not confirmed, but the following criteria may be used to assess whether packaging contains sufficient recycled content to be exempt:
- Product specifications
- Supply contracts
- Production certificates and certificates of conformity
- Business accounting systems
- Accreditations and international standards
- Quality assurance audits
Please see section 5.3 from the government’s website ‘further information for businesses.’
Can I use my own regrind?
Not directly. Part of the definition of pre-consumer plastic specifically states that material being fed back into the process that it was generated from will not count towards recycled content. The wording of the current draft mentions that material must be reprocessed by a reprocessing facility but no longer specifies this must be at a separate site. Plastribution’s interpretation is that using your own regrind will not count as recycled materials. However, if you sell your scrap to a recycler and they sell you back material that may contain your scrap, this can be counted as recycled content. Both pre and post-consumer waste are considered as recycled materials.
Plastribution Product Manager Ian Chisnall and Technical Specialist Joseph Putt provide a quick insight into the Plastic Packaging Tax in the video below.
Click here to access Plastribution’s original resource on the Plastic Packaging Tax.