Plastic Packaging Tax Statement

Updated 18 August 2022

Plastic Packaging Tax is tax on plastic packaging manufactured in, or imported into the UK, where the plastic used in its manufacture contains less than 30% recycled plastic. Where 30% or more recycled plastic is used, no tax will be due, but the plastic packaging will still need to be accounted for.

Smith & McLaurin Liability

After much deliberation with customers, suppliers and our Indirect Tax Consultants we have finally adopted our position with regard to tax liability on the Plastic Packaging Tax (PPT)

We will take liability for filmic liner tonnage we sell into the market place Plus any plastic packaging on raw materials shipped to us by our supply base where the packaging only covers one unit of product as this is not deemed as transit packaging. Included with this is the plastic element of IBC's as HMRC has deemed the plastic and metal to be separate elements.

When Does Plastic Tax Come into Effect?

The tax has been live from 1 April 2022.

What’s the Rate of Plastic Tax?

The rate of tax in the UK will be £200 per metric tonne of plastic packaging however in the EU the rate of plastic tax is €800 per metric tonne. Note, The EU Plastic Packaging Levy, introduced on 1 January 2021, is not to be confused with the UK’s new Plastic Packaging Tax despite both being hot on the agenda. Where the Plastic Packaging Tax focuses on the amount of non-recycled plastic content in a pack, the Levy puts the focus on closing the packaging loop and the disposal of plastic at the end of its life.

In the UK you must register for Plastic Packaging Tax if you manufacture or import 10 or more tonnes of plastic packaging over a 12-month period, even if all the packaging you manufacture, or import contains 30% or more recycled plastic.

What Plastic Packaging is Chargeable for the Tax?

Plastic Packaging Tax will be due on finished plastic packaging components manufactured in, or imported into the UK in which less than 30% of the plastic is recycled plastic. This includes imports of packaging which already contain goods, such as plastic bottles filled with drinks. Where the packaging you import contains other goods, the tax only applies to the plastic packaging itself.

For all breakdowns of plastic which is chargeable please refer to the GOV.UK website.

Who Will be Liable?

A plastic packaging component is chargeable for Plastic Packaging Tax when it’s finished – a component is classified as “finished” when it has undergone its last substantial modification. This applies even if waste or surplus material remains attached to it, however this is not treated as part of the finished component when calculating the amount of tax due.

What’s Classed as the Last Substantial Modification?

If your business is in the UK, you will be liable as a manufacturer for Plastic Packaging Tax if you perform the last substantial modification before the packing or filling process. The last substantial modification is the last manufacturing process that makes a significant change to the nature of the packaging component, as it alters one of the following characteristics of the packaging component:

• Shape
• Structure
• Thickness
• Weight

Examples of Manufacturing Processes Which are Not Substantial Modification Processes

Not all manufacturing processes which change the shape, structure, thickness or weight are a substantial modification. For example, the following processes are a thorough list of manufacturing processes which are not substantial modifications:

• Blowing or otherwise forming a packaging component from a preform — for example, blowing bottle preforms into bottles
• Cutting — for example, cutting film to size or cutting formed trays out of a larger sheet
• Labelling — for example, gluing a label to a tub or heating a shrink film label onto a bottle
• Sealing — for example, attaching a film lid onto a tub or attaching 2 sides of a piece of film to close a bag

What Plastic Packaging is Not Chargeable for the Tax?

There are various types of products where Plastic Packaging Tax will not be charged regardless of how much recycled plastic the packaging contains. There are 3 categories of products which are not chargeable because they are specified in the law as not being classed as a packaging component for the purpose of the tax even though they fall within the general definition. These are items include:

• Where the packaging function is secondary to the storage function
• Where the packaging is an integral part of the goods
• Designed primarily to be reused for the presentation of goods

There are 4 types of products which are classed as plastic packaging for the purpose of the tax but are exempted from being chargeable by the law, these are:

• Used as transport packaging on imported goods
• Used in aircraft, ship and rail goods stores
• Used in the immediate packaging of a medicinal product
• That are permanently designated or set aside for use other than for a packaging use

Steps to Take When Deciding If you Should Pay the Tax

1. Work out which packaging is subject to Plastic Packaging Tax
2. Decide if you need to register for the tax
3. Work out the weight of the packaging you manufacturer or import
4. Check when you must register for the tax
5. Find out how to register
6. Check which records and accounts you must keep
7. Find out how to carry out due diligence
8. Read how to claim a credit or deter paying Plastic Packaging Tax
9. Discover how to complete your return 

How to Avoid Plastic Packaging Tax?

If you are looking to avoid plastic packaging tax and need to find alternative materials, then discover our innovative EcoPack product. EcoPack is a revolutionary one side coated heatseal and moisture barrier FSC® certified paper which provides a sustainable, translucent paper-based alternative to avoidable plastic packaging. With EcoPack you can benefit from fully recyclable paper packaging which is adaptable, efficient and attractive. If you are looking for further advice surrounding plastic tax, we have produced a range of articles surrounding how your business can avoid plastic packaging and have also compared paper-based packaging to plastic to provide further guidance for your business.

Visit The GOV.UK Website

For further guidance and advice surrounding Plastic Packaging Tax and how to notify liability to register, please visit the GOV.UK website.