Thanks to campaigns seeking to improve the health and social outcomes for individuals, families and communities, we have witnessed a steady social shift away from tobacco and alcohol consumption. We have also seen the reverse, with policies put in place to encourage research and development in cutting-edge industries. After all, “if you want more of something; subsidise it; if you want less of something, tax it.”
With this in mind, carrying a single-use carrier bag could eventually become as taboo as smoking. In fact, following the introduction of the 5p charge, shoppers use of plastic carrier bags dropped by 59% in the space of just one year. When the Plastic Packing Tax (PPT) comes into effect, other plastic packaging items may suffer a similar fate.
So, what is this the PPT and how will it likely impact your business? Let’s find out.
What is the plastic packaging tax UK?
A couple of years ago, a potential tax ban on single-use plastics seemed far out of the question. Either that or it would at least take a couple of decades to launch. Today, the PPT is becoming a reality and will come into force on 1 April 2022.
The PPT is designed to provide an incentive for businesses and manufacturers to use recycled plastics. The hope is that this will lead to increased demand for recycled plastics instead of single-use plastics. If demand for virgin plastics goes down, we should start to see a significant drop in the amount of plastic waste sent to landfills.
On top of that, we can expect to see a rise in the amount of plastic that is collected and recycled. Currently, less than half of UK household waste is recycled every year. To learn more about this subject, head over to our article on the problems with recycling plastic.
What is classed as plastic packaging?
You may have some questions about what is classed as plastic packaging. How do you know if you will be taxed for your packaging? Don’t worry, we’ve got you covered!
The PPT refers to plastic as a polymer material to which additives or substances, such as calcium or dyes may have been added. Note that this includes polymers that are biodegradable, compostable or oxo-degradable, though cellulose-based polymers that have not been modified chemically are not considered as plastics. You also need to bear in mind that any additives will be classed as part of the plastic when it comes to assessing the amount of plastic in a packaging component.
Of course, some packaging components may contain more than one material, such as glass, wood, aluminium and steel. Understandably, you may be wondering how this will affect the tax. If the packaging contains more plastic by weight than any other substance, it will be subject to tax.
Who is liable for the plastic packaging tax?
Now that we’ve established how to work out if your packaging is considered plastic, it’s important to know who is liable for the plastic packaging tax.
If your business manufactures or imports 10 or more tonnes of plastic during a 12 month period, then you must register for the plastic packaging tax.
During the first year of the tax, a business will only need to register for PPT when their amount of plastic packaging exceeds 10 tonnes in a 12 month period starting from 1 April 2022.
Sounds pretty straightforward, right? Well, if you’re importing your plastic from a business overseas, things can get a little complicated. It’s a good idea to get more information from your supplier on packaging content, as well as becoming the ‘liable company’ for taxable plastics in their packaging.
How much will the plastic packaging tax cost?
Unsurprisingly, one of the top questions asked about the PPT is how much will the plastic packaging tax cost?
For plastic packaging that contains less than 30% recycled plastic, the rate of tax will be £200 per tonne. The same is also true for packaging on imported finished goods.
The good news is that if your business meets the 30% recycled content threshold, forking out money to pay tax will be one less thing you need to worry about. Though keep in mind that you must still keep a record of what substances are in your packaging. There is now a 10 tonne threshold for manufacturing or importing packaging in a 12 month period.
Which products will be affected by the plastic packaging tax?
Unless they contain at least 30% recycled plastic, most products that can be found on the shelf will be affected by the PPT. However, there are a few exceptions. The PPT may be exempt in cases where plastic packaging is used for:
- Immediate packaging of licensed human medicines
- The creation of aircraft, ship or rail stores
- Safe transit of goods
- Goods exported within 12 months
- Components that will be set aside for or are permanently designed for another packaging purpose
What does the plastic packaging tax mean for your business?
Let’s face it, the introduction of the PPT is pretty daunting. Many businesses are questioning how the tax will affect their day-to-day operations. Many are wondering whether they will be able to pass on the cost to the consumer.
The good news, however, is that half of UK consumers are willing to pay more for recycled plastics, with 46% saying that they feel guilty about their plastic use. So, opting for recycled plastics has got to be worth a second thought, right? Plus, think about how recycling plastic helps the environment.
Knowing where to start isn’t always easy. Thankfully, Tyler Packaging offers recyclable packaging solutions, which include up to 30% recycled plastics – helping your business become greener and, more importantly, avoid potential tax implications.