Get ahead and prepare your business for the new Plastic Packaging Tax
The tax, which will come into force on 1 April 2022, will be charged at a rate of £200 per tonne and only applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic.
You will need to register for the Plastic Packaging Tax if you’ve manufactured or imported 10 or more tonnes of finished plastic packaging components within the last 12 months or will do so in the next 30 days.
Steps to take when deciding if you should pay the Plastic Packaging Tax:
Work out which packaging is included
There are 2 types of plastic packaging subject to the tax. These are packaging designed to be suitable for:
- use in the supply chain
- single use by the consumer
Plastic packaging containing 30% or more recycled plastic is not chargeable for the tax. However, it still counts towards the 10-tonne threshold for packaging you manufacture or import in a 12-month period, and you must still keep records of it.
Decide if you need to register for the tax
First, you’ll need to determine whether you are subject to the tax. Plastic Packaging Tax is due on plastic packaging components when they’re finished.
A component is finished when it has undergone its last substantial modification. Where the last substantial modification happens as part of the packing or filling process of the packaging, the component is finished after it has undergone the last substantial modification before that one.
The business that undertakes the last substantial modification before the packing or filling process will be liable for the tax.
If you do need to register, you’ll need to work out the weight of the packaging you manufacture or import.
Registering for the Plastic Packaging Tax
There are 2 tests to consider when checking if you need to register. You must look back over the last 12 months and look forward to the next 30 days.
If you meet either of these tests, you must register for the tax.
If you’re liable for Plastic Packaging Tax, you will be able to register from 1 April 2022.
To register, you may need to provide certain information, such as:
- Business type
- Businesses address and contact details
- The date your business became liable for plastic packaging tax
- An estimate of how much finished plastic packaging you expect to manufacture or import in the next 12 months
- A customer reference number. This could be your Corporation Tax Unique Tax Reference (UTR), Self-Assessment UTR (or National Insurance number), Company Reference number, or Charity Registration number.
Once registered, you’ll be assigned a reference number that you should use in correspondence.
Check which records and accounts you must keep and how to carry out due diligence
If you’re registered for Plastic Packaging Tax you must keep accounts and records to support the information you submit in your quarterly tax returns. Once registered for the tax, you’re required to keep the records for at least six years following the end of each accounting period.
In summary, the records are:
- Weight details of each plastic packaging component
- Details of the weight of plastic packaging exported, if applicable
- Evidence of recycled content, including how you’ve worked out the percentage of recycled plastic, its source, and what product lines the content is used with
- Evidence of why an exemption applies (e.g., packaging for medicine used for human medical products).
It’s important to note that even if you are below the threshold, you should still keep records. Because the threshold is a rolling 12-month time period, you could reach the limit and be liable to pay tax.
Find out how to complete your return
If you manufacture in the UK and or import plastic packaging components into the UK, you’ll need to submit a return to HMRC every quarter. You will need to include the total weight of finished plastic packaging components manufactured in the UK in the accounting period.
Include any packaging components you’ve reported on a previous tax return as being intended for direct export but they:
- will now be supplied within the UK
- have not been exported within 12 months from the date of manufacture
Find out more about how to complete your return here.
You may be charged penalties if you do not submit your return or pay the tax in time. You’ll also be charged interest on late payments. Late payment interest is calculated on the outstanding tax from the date the amount became due, and payable to the date the amount is actually paid.
As with any new tax introduction, getting started sooner rather than later in understanding the impact of the tax is a good idea. If you can get ahead on any changes, come April you shouldn’t have to make many changes to comply.