Understanding Plastic Packaging Tax: Objectives, Exemptions, and Applicability
Implementation of new laws and tax policies is not uncommon. Therefore, it is important to keep up to date with any changes and developments that may impact your business and how it is run. A recent change to consider includes the Plastic Packaging Tax (PPT).
We explore this topic to provide insight which may be helpful for our readers. However, it is always recommended you seek professional tax advice to suit your specific business needs.
What is PPT?
The PPT is effective from the 1st of April 2022, and is a charge on plastic used for product packaging. The tax will affect companies that either manufacture or import 10 or more tonnes of plastic packaging for products since the date of implementation. If your company falls within this bracket you may need to register for the tax.
The Goal of PPT and its impact?
With Environmental, Social, and Governance (ESG) goals being an important priority for businesses, ESG targets have also appeared more prominently in recent government policies. Considering the damaging impact plastic packing has on the environment, the PPT is an attempt to fulfil ESG goals in an effort to create a sustainable future.
The tax is estimated to impact up to 20,000 manufacturers and importers. If your startup is likely to be liable for PPT, it is critical to consider the ways in which this will affect your business.
Businesses that are importing or manufacturing less than 10 tonnes of plastic a year will not be affected by the tax. Despite this, it should be noted that these smaller businesses also heavily contribute to 90% of global plastic waste.
In light of the above, your startup may benefit from considering the implications and intended goals of the PPT by adopting an eco-friendly business model. Adopting this stance may even improve the brand image of your startup among the ever more aware consumers and investors found in today’s market.
Exemptions
The PPT provides some exemptions that may apply to those affected parties. For example:
Plastic packaging that contains at least 30% recycled plastic content may exempt you from paying PPT.
Further, some items are tax-free, regardless of the amount of recycled plastic they contain, including:
Plastic packaging made or imported for immediate use in the packaging of a medicinal product. Immediate packaging is the container that is immediately in contact with the product.
The product must be a medicinal product. This is something that may be used to: prevent or treat diseases, aid in diagnosing a condition, or, restore or correct a physiological function.
Packaging used on goods imported into the UK is not subject to PPT. This is the packaging used to protect the product from damage in transport and handling. There are different categories of packaging that either may or may not fall under this exception and may still apply for PPT.
Tax already paid on goods that are later exported from the UK may be claimed on your tax return. To claim this, the product must be exported, and you must have records to show the product has been exported.
Packaging for products stored in aircraft, ships, and trains may apply under a PPT exemption. However, if the products are later imported into the UK from the mentioned stores, they may be subject to the tax.
Some forms of plastic are excluded from PPT, and do not count toward the overall weight of the plastic used.
Plastic packaging with the primary purpose of storing goods for an extended period of time. This may include your plastic Quality Street box, or a toolbox.
Packaging for items that are integral to the product, such as printer cartridges.
Plastic that is intended for the presentation of goods as soon as it is manufactured. For example, a display shelf in a store.
Am I liable to pay PPT?
The tax may be applicable to you where the total weight of plastic packaging used or imported within the 12-month period exceeds that of 10 tonnes. The tax is also applicable where the packaging contains less than 30% of recycled plastic.
To check if your packaging falls under the definition of plastic packaging, it is advisable to visit the government website to Check which packaging is subject to PPT. To help identify whether the tax is applicable to your startup you must keep accounts of the weight in metric values, and have an idea of the components that make up the packaging you are either using or manufacturing.
How and when shall I apply for PPT?
If your business meets the threshold within the 12-month period, you must apply for this tax via the HMRC website. The cost of the tax sits at £200 per metric tonne of packaging.
If you are required to pay PPT, the application must be submitted to HMRC within 30 days from the date on which your business will be liable to pay PPT.
Authors: Tanisha Shah, Rita Almazuri & Sofia Martiello - Editor: Gaia Freydefont -
Authors: Tanisha Shah, Rita Almazuri & Sofia Martiello - Editor: Gaia Freydefont -
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DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.
Sources
Keir Thomas-bryant, 'Plastic packaging tax: What businesses need to know about the new legislation' (Sage, 4 April 2022) <https://www.sage.com/en-gb/blog/plastic-packaging-tax-need-to-know/> accessed 25 May 2022
Jane L, 'What is the new “plastic packaging tax”?' (Ross Brooke, 2021) <https://www.ross-brooke.co.uk/what-is-new-plastic-packaging-tax/> accessed 25 May 2022
HM Revenue & customs , 'Plastic Packaging Tax: steps to take' (GOVUK, 4 November 2021) <https://www.gov.uk/guidance/check-if-you-need-to-register-for-plastic-packaging-tax> accessed 25 May 2022
Out-law Guide , 'Plastic Packaging Tax' (Pinsent Masons, 7 January 2022) <https://www.pinsentmasons.com/out-law/guides/plastic-packaging-tax> accessed 25 May 2022
Matt Dobson, 'Plastic Packaging Tax 2022' (GWP Group, 15 March 2022) <https://www.gwp.co.uk/guides/hmrc-plastic-packaging-tax-legislation/> accessed 25 May 2022
Gov.uk, ‘Check Which Packaging Is Not Subject to Plastic Packaging Tax’ (GOV.UK 2022) <https://www.gov.uk/guidance/check-which-plastic-packaging-is-exempt-from-plastic-packaging-tax#exempt> accessed 31 October 2022
