Everything you need to know about the UK Plastics Packaging Tax

In April 2022, the UK government implemented a new tax on plastic packaging that will impact millions of businesses. In this article, we explain what the new tax is, who it applies to, and how businesses should respond.

 

The use of plastic is a crucial environmental concern for businesses. Many have committed to taking measures to reduce overall plastic use and limit single-use plastic where possible, opting for alternative materials, including paper and recyclable and biodegradable plastics. However, in 2019, only 9% of plastic waste was recycled globally while 22% was mismanaged and 50% ended up in landfills.

New responsible business laws and taxes targeting product packaging are being developed and adopted across different parts of the world. This is because around 40% of all plastic comes from packaging, the vast majority of which is single use. These volumes are rarely monitored by companies and governments, which impedes efforts to reduce plastic usage.

The UK Plastics Packaging Tax, which entered in forced this year, is the most prominent and stringent law to be adopted In the UK and carries significant implications for businesses. Other examples of packaging laws include the EU 2019 Single Plastics Directive, China’s 2020 Plastic Packaging Directives on Plastic Pollution Control, and India’s forthcoming Plastic Waste Management Amendment Rules.

 

What is the UK Plastics Packaging Tax?

From April 2022, companies importing or manufacturing more than ten tonnes of finished plastic packaging in(to) the UK over a twelve-month period must register for the Plastic Packaging Tax. They must pay a tax of £200 per tonne of plastic containing less than 30% of recycled plastic. Companies must be able to demonstrate and keep records that plastic contains at least 30% recycled plastic to claim an exemption

The tax targets two types of plastic packaging:
1) plastic packaging used in the supply chain to protect the goods – such as shrink wrap on clothing or beauty items, or wrapping on furniture

2)  single use plastic packaging used purposefully by the consumer such as carrier bags and disposable cups and plates.

The tax also applies to typically more sustainable materials such as oxo-degradable, biodegradable, and compostable plastics.

Companies providing inaccurate or incomplete information, or failing to pay the tax, will be liable to both civil and criminal penalties. There is a £500 fixed penalty for non-compliances issues by the government, and a further daily penalty for every day of non-compliance. Over the course of a year, the penalty can go over £15,000.

 

Who does it apply to?

This law applies to UK-based organisations who are importing finished plastic packaging into the UK, or companies that manufacture finished plastic packaging in the country.

The industries most affected by this tax are manufacturing, garment, food and beverage, and household appliances, as plastic packaging is often used for the protection and preservation of products. The law also affects suppliers, as buyer organisations look for cost savings from plastic reduction and plastic packaging alternatives.

By requiring companies to be more transparent about plastic packaging, the law will also bolster efforts to address greenwashing of recycled content of products and packaging. This is a priority for the UK government under the Green Claims Code to tackle misleading environmental product information.

 

What do I need to do?

You should start by understanding the types and volume of plastic packaging that your business sells, produces and/or uses in its products. This includes gathering information on the types of plastic and components used and volumes of each, the percentage of recycled plastic in your packaging.

You should engage with your operations, business partners and supply chain to gather information on the products they provide you with. You can be held liable for any unpaid Plastic Packaging Tax resulting from non-compliant business partners, including buyers and suppliers. Knowing and mapping your supply chain is essential to prevent against this.

After gathering this information, you must register with HMRC and report the data to the UK government, who will determine how much tax, if any, your organisation must pay.

 

How Sedex can help

Our Consulting team can help your business understand how the law affects you, assess the levels of packaging and types of plastic linked to your business, and engage with your key stakeholders, especially suppliers, to assess your plastic packaging volumes.

We can also support you with developing a sustainability strategy with environmental goals, and clear, tangible targets on plastic and packaging reduction, sustainable alternatives and long-term aspirations. This will ensure your business is on the right track to become more environmentally conscious and transparent, source more responsibly, and reduce costs on future taxes and potential fines.

 

Get in touch today to discuss how we can help you with your plastics packaging.

 

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