Specialist R&D Tax & Grant Funding Advisors

Guest blog: New plastic tax has kicked in. Is your business ready?

Written for our partners Business Express. A new Plastic Packaging Tax launched on the 1st April and aims to reduce the amount of single-use plastics companies use. Here's what you need to know.

Barrie Dowsett

Chief Executive Officer


10 minutes

Every year in the UK alone we generate a phenomenal 5 million tonnes of plastic waste. And the sad fact is that far too much of it is still ending up in rivers, oceans and landfill.

With this in mind, the government is about to launch a new plastic packaging tax (PPT), aimed at discouraging businesses in their use of single-use plastic waste. Firms should prepare now, as the new rules kick in very soon on the 1st April 2022.

What will the new plastic packaging tax apply to?

PPT will apply to finished plastic packaging that is made using less than 30% recycled plastic. It may have been manufactured in the UK or been imported. Examples include:

  • Plastic drinks bottles
  • Bubble wrap
  • Trays for ready meals
  • Sandwich bags
  • Sticky tape
  • Re-usable plastic boxes
  • Bin liners

How much will plastic packaging tax cost companies?

The tax will be £200 per metric tonne of plastic packaging.

Who needs to pay plastic packaging tax?

Your business will be subject to PPT if:

  • At any time after the 1st April 2022, the manufacture or import of finished plastic packaging is expected to be at least 10 tonnes in the following 30 days – you will need to register within 30 days of the first day of meeting this condition.
  • Your business has manufactured or imported 10 tonnes or more of finished plastic packaging in a 12-month period ending on the last day of a calendar month (e.g. June). The company is then subject to PPT from the first day of the next month (1st July) and will need to register within 30 days (by 31st July).

Regarding the second condition, while PPT is being introduced a business only needs to register for the tax when the amount of plastic packaging is 10 tonnes or more in a 12-month period from the 1st April 2022.

When does registration open for PPT?

You can register from the 1st April 2022. However, it’s crucial to be reviewing your business practices and supply chains now in order to understand what effect the new rules will have.

How do I sign my business up for plastic packaging tax?

Registering for PPT is set to be a fairly straight-forward process which can be done online using the Government Gateway.

My business doesn’t generate plastic waste. That means I don’t need to do anything, right?

Unfortunately not. Even if your business doesn’t need to pay any tax, you must still keep sufficient records to prove this is the case. HMRC can check at any time.

Are there any types of plastic packaging that aren’t affected by PPT rules?

In terms of exemption from PPT, there are four groups to note. They are:

  • Packaging used in the transportation of products into the UK
  • Plastic components that will never be used in packaging at all
  • Plastic packaging used for international journeys by air, sea or rail
  • Plastic packaging used for human medicine

If you’re not sure whether the type of plastic packaging your business uses is exempt or excluded from PPT, check the Gov.uk website.

What records should my business keep for PPT purposes?

HMRC may want to audit your plastic waste procedures and tax position at any time after the 1st April. This is why specific evidence is so important, and businesses should be able to show:

  • Weight (both a breakdown and in total) of the materials used to manufacture plastic packaging. However, you don’t need to include packaging used in the transportation of imported goods.
  • The weight of any plastic packaging used in exporting which therefore attracts relief from the tax.
  • The weight of any plastic that is excluded from PPT. You should also be able to clearly show why the plastic packaging is tax-exempt.
  • The method and data you’ve used in determining how much recycled plastic is contained in a piece of packaging. In other words, be able to show how you’ve calculated the plastic content.

How does PPT work with importing packaging into the UK?

If your business imports plastic packing into the UK, it will still be liable for PPT. If imported goods are placed into a customs procedure (inward processing or customs warehousing for instance), no plastic packaging tax will be due until the packaging has been moved on for use. PPT won’t apply where the packaging is re-exported and no customs procedure has occurred.

If a company is based overseas but imports plastic packaging into the UK, it is then responsible for registering for PPT any paying any amounts owed.

What should I do now?

The best course of action initially is to thoroughly check the contract your business has with its packaging supplier to get a clearer idea about the effect PPT will have (if any). You must also ensure you’re signed up for PPT where applicable from the 1st April 2022.

Bear in mind too that third party purchasers buying packaging from UK-based companies could end up jointly liable for PPT if HMRC believes the tax wasn’t paid correctly. This means it’s in your interest for all suppliers to demonstrate they’ve accounted for PPT and paid what they owe.

Has your company taken on an innovative new project recently?

Whether it be a brand new sustainable packaging design, eco-friendly waste reduction process or any other type of innovation, if scientific or technical research occurred then you may be owed generous R&D Tax Credits to help with the cost.

An incredibly valuable tax incentive that’s been around since the year 2000, up to 33% of eligible R&D expenditure can be claimed back from HMRC. It can hugely reduce your Corporation Tax bill, and loss-making companies can receive a lump sum payment instead.

Any UK company of any size or structure can apply, and with average claims topping £55,000 can yours afford to miss out?

This article originally appeared on Business Express.

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