Is your business ready for the new Plastic Packaging Tax?
20 Dec 2021
Published in: Member News
From 1 April 2022, Plastic Packaging Tax (PPT) will be introduced in the UK. The UK Government is introducing this new tax to encourage the use of recycled rather than new plastic within plastic packaging.
What is covered under PPT?
PPT will apply to finished plastic packaging manufactured in, or imported into, the UK where the plastic used in its manufacture is less than 30% recycled. It will include: • Plastic drinks bottles • Ready meal trays • Bubble wrap • Sticky tape • Re-usable plastic boxes • Sandwich bags • Bin bags Where goods are imported, this includes filled packaging such as drinks bottles and ready meal trays. The tax will be calculated at £200 per metric tonne of plastic packaging.
Who must register and account for PPT?
What is ‘finished’ plastic packaging?
The goods become liable to PPT on completion of manufacture in the UK, or at time of import into UK. For the latter, the consignee named on the UK import declaration will be responsible for retaining records and registering for PPT.
When do I need to register?
Although registrations cannot be submitted until 1 April 2022, we recommend that businesses start reviewing plastic packaging production or supply chains to confirm whether you will have to register for PPT.
Evidence will need to be retained to confirm the quantities of plastic packaging so that this can be audited by HMRC. Such records include:
- Total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging, excluding packaging which is used to transport imported goods
- Data and calculations used to determine if a packaging component is, for the most part plastic, and how much recycled plastic it contains
- Weight of exempted plastic packaging and the reason for the exemption
- Amount in weight of plastic packaging exported, and allowed relief from the tax
We can assist with this analysis so that you can be confident that you have satisfactory records in place to justify exemption, or to calculate accurate taxable amounts for submission to HMRC.
Exceptions to PPT
There are 4 groups that are excepted from the tax. These are:
- Transport packaging used when importing goods into the UK.
- Plastic packaging used in aircraft, ship or railway stores for international journeys.
- Plastic packaging produced or imported for use in the immediate packaging of a human medicine.
- Components permanently designated or set aside for non-packaging use.
You must still include 3 and 4 when assessing whether you meet the 10 tonnes threshold of plastic packaging in a 12 month period for determining if you need to register for the tax even though the tax is not chargeable on these.
Importing packaging into the UK
PPT will be liable on import of the packaging into the UK on clearance of the packaging by customs. Where goods are imported and placed into a customs procedure, such as inward processing or customs warehousing, the PPT will not be liable until the packaging is removed to free circulation. If the packaging is re-exported without being removed from the customs procedure, then PPT will not become liable.
Companies based outside the UK must be registered for and pay PPT if they import plastic packaging into the UK (e.g. under Delivered Duty Paid incoterms).
What if I sell packaging that is ultimately exported from the UK?
If you produce or import packaging that is subsequently re-exported outside the UK, your business can apply to request a credit for or defer the tax. The packaging must be exported within certain timescales to qualify for a credit to be applied.
If you know at the time the tax is liable that the packaging will be exported, you can defer the tax provided the packaging is exported within 12 months.
If, at the time the tax is liable you do not know if the packaging will be exported, you must account for PPT and request a credit once you have received satisfactory evidence of export. In this instance the goods must be exported within two years.
Companies who are part of a Group can apply to appoint one member company to administer the tax and submit the returns to HMRC. Further details are due to be provided by HMRC on how this will operate.
How do I register?
Companies will be able to apply for PPT from 1 April 2022 via the government gateway. The link to register is not yet available.
What can I do to prepare?
We recommend that businesses review contracts with customers and suppliers now. You should ensure that contracts will allow you to charge PPT on to your customers from 1 April 2022. Failure to take this into account could result in additional costs which may have to be absorbed due to contractual restraints.
In addition, buyers of packaging from UK companies can be considered jointly liable for the PPT if HMRC can evidence that the buyer was aware the tax was not paid at the correct time. Therefore you should consider how you can get confirmation from your suppliers that they have correctly accounted for PPT.
If you would like to discuss PPT and how this will impact on your business, please contact Alison on the contact details below.
Partner, Head of Indirect Tax
MHA MacIntyre Hudson
T: +44 (0)7515 919389
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