A new UK Tax on Plastic
The UK-wide Plastic Packaging Tax comes into effect from April 1st 2022. This is the result of a new government clampdown on the use of non-recyclable (single use) plastics in packaging manufactured or imported by businesses across the country.
Under the new legislation, all packaging producers will be required to pay the full cost of managing packaging. Plastic packaging is typically only used for a short period of time and then disposed of. It accounts for 44 per cent of plastic used in the UK, but 67 per cent of plastic waste.
This new tax aims to tackle the issue of plastic waste and the more than two million tonnes of plastic packaging used in the UK each year. The vast majority of this packaging is made from new, rather than recycled plastic.
The GCA is working with Products of Change (PoC), an organisation dedicated to delivering the latest sustainability news. PoC have shared with the GCA details of how this tax will affect businesses, see below for full details and relevant links detailing this tax at www.gov.uk.
PoC founder, Helena Mansell-Stopher, joined our Panel Discussion at the October 2021 GCA Conference in Manchester, above.
Plastic Packaging Tax at a glance
- Tax will apply to plastic packaging manufactured in, or imported into the UK where the plastic used in its manufacture is less than 30 per cent recycled.
- The tax rate is £200 per metric tonne of plastic packaging.
- Business will need to keep records and register for the tax. They will be required to do this even if all packaging they manufacture or import contains more than 30 per cent recycled plastic.
- Manufacturers producing less than ten tonnes of plastic packaging per year will be exempt.
- Overseas taxpayers (importers) will require a UK tax representative.
- Bio-based, biodegradable, and compostable plastic packaging will still be subject to tax, and subject to review. This will likely be clarified in the secondary legislation following April 2022.
- The online service to register and pay will be live from April 1st, 2022.
Why are the government bringing in this plastic tax?
Using new plastic typically has greater environmental impact as it requires unnecessary resource extraction and processing, with higher energy use and emissions than using recycled material. It also results in significant amounts of additional plastic waste on the market, which is generally sent to landfill or incinerated.
In March 2018, the Government launched a call for evidence on using the tax system – or charges – to tackle single-use plastic waste. It received a record 162,000 responses, highlighting the strong public interest in action in this area.
Four years on a new tax on plastic packaging will now be applicable to businesses that produce or import plastic packaging which uses insufficient recycled content, taking effect from April 2022. The tax will be set at a rate that provides a clear economic incentive for businesses to use recycled material in the production of plastic packaging. It is hoped this will create greater demand for recycled plastic, and in turn stimulate increased levels of collection and recycling of plastic waste.
The tax will complement reformed Packaging Producer Responsibility regulations. These reforms will discourage businesses from designing and using plastic packaging which is difficult to recycle, which will increase the supply of easier-to-recycle plastic.
The government believes that the tax and Packaging Producer Responsibility regulations will provide business with the right incentives to recognise the impact of their plastic packaging decisions and drive the development of more sustainable packaging.
So what is the Plastic Packaging Tax?
A new tax that will apply to all plastic packaging manufactured in the UK and unfilled plastic packaging imported into the UK, the legislation will impact plastic packaging with less than 30 per cent recycled content.
To mitigate against disproportionate administrative burdens, there will be a tax exemption for manufacturers and importers of less than ten tonnes of plastic packaging per year. The tax will not apply to any plastic packaging which contains at least 30 per cent recycled plastic, or any packaging which is not predominantly plastic by weight.
Imported plastic packaging will be liable to the tax, whether the packaging is unfilled or filled. The rate is £200 per metric tonne of plastic packaging.
According to the Government website, the tax will ‘provide a clear economic incentive for businesses to use recycled plastic material in plastic packaging, which will create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.’
Impact of the Plastic Packaging Tax
The tax is expected to impact on an estimated 20,000 manufacturers and importers of plastic packaging. It is estimated that as a result of the tax, the use of recycled plastic in packaging could increase by around 40 per cent. This is equal to carbon savings of nearly 200,000 tonnes in 2022 to 2023, based on current carbon factors.
Recycled plastic is defined as plastic that has been reprocessed from recovered material, by using a chemical or manufacturing process, so that it can be used either for its original purpose or for other purposes. This does not include organic recycling.
Businesses must calculate the proportions of recycled plastic content based on the single specification of products manufactured on a production run.
Misstatements or non-compliance with the incoming regulation could results in fines of £20,000 or three times a business’ total plastic packaging tax liability. Evading the tax could result in a six-month prison sentence.
What to do now?
With the new tax coming into effect from April next year, here are a few steps you might want to consider taking next:
1. Think about your strategy for dealing with and complying with the tax and its impact on your wider packaging strategy.
2. Begin thinking about new packaging solutions. Start working with suppliers to manage your exposure to the tax.
3. Get your monitoring, control, and reporting processes in place.
4. Keep precise records of the weight of plastics used for each item sold.
Further Information
Visit the government website for full details on the Plastic Packaging Tax and also details of the UK’s path to net zero set out in landmark strategy.