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What is The Plastic Packaging Tax (PPT)?

 In Blog, Blogs

Everybody loves a good joke, but there’s not much to laugh about when it comes to plastic packaging. As of April Fool’s day this year, the UK government will introduce a new tax on plastics designed to deter companies from plastic reliance and steer them towards greener alternatives. From April 1st 2022, the British government has introduced the Plastic Packaging Tax (PPT) – an environmental fee designed to encourage companies to use recycled plastic in their packaging. In turn, it is expected that this will increase demand for recycled plastic, leading to improved recycling rates and decreasing the volume of waste sent to landfill.

In the United Kingdom, the Plastic Packaging Tax (PPT) will apply to finished plastic packaging either manufactured in or imported into the UK. Manufacturers and importers will be charged £200 per metric tonne of plastic packaging if it contains less than 30% recycled plastic in its composition. The aim of the PPT is to promote the use of recycled materials, boost recycling rates and waste collection. Ultimately, taxes such as the PPT are designed to fight the tide of plastic polluting our planet and promote environmental protection.

How does it work?
There are two types of tax applicable to plastic packaging and these will impact both importers and manufacturers of plastic. The tax will apply to businesses who manufacture or modify plastic packaging in the UK, or import plastic packaging into the UK, whether empty or filled. Businesses manufacturing or importing over 10 tonnes within a 12-month period must legally register for the PPT. The tax will also apply to finished plastic packaging.

Individual packaging components are commonly manufactured separately before being assembled at a later stage. Examples of this include plastic bottles, caps and labels all manufactured separately before being assembled into the final packaging unit. Products used both in the supply chain and single-use by consumers are subject to PPT charges; these charges are triggered at any point in the production line when ratable plastic components are manufactured in the UK either by a manufacturing or importing company.

As long as the packaging component meets the definition, it doesn’t matter whether it is manufactured or imported for use in the goods’ supply chain, or whether it is purchased or used by a consumer or end-user. Packing components are products that are used in conjunction with other items to hold, protect, handle or present goods at any point along the goods’ supply chain from producer to consumer.

There are, of course, grey areas. It is possible that plastic bottles containing beverages or packaging for objects will be subject to the tax, subject to specified exceptions based on the type of packaging used. Examples of packaging that is primarily designed to be used for storage but also serves as an integral part of the product include glasses cases and DVD cases. In this case, the question arises of whether this plastic is packaging or not. It’s certainly not single-use unless viewers plan on throwing the DVD case away, which is obviously not the presumed destiny of the protective plastic casing.

Plastic packaging that is intended to be reused for the presentation of goods, such as shop fittings or sales stands, is exempt from the payment of PPT charges. Additionally, despite the fact that the tax is supposed to benefit the environment, it includes plastics that may be composted or biodegraded. The PPT will also be applied to products that are intended for use by consumers or users in containing any commodity or garbage: the PPT covers plastic bags, bin liners, refuse sacks and disposable cups.

A plastic packaging component will be considered for tax purposes if a package has more plastic than any other single ingredient notwithstanding its multi-material composition. Ten-gram packages that comprise four grammes of plastic, three grammes of aluminium and three grammes of cardboard will be classified as plastic packaging for tax reasons, regardless of the other materials used. HM Revenue & Customs (HMRC) requires proof from the manufacturer or importer that a plastic packaging component is exempt from tax. It will be regarded as taxable plastic if they are unable to prove this. Hopefully such bureaucratic restrictions and specifications provide a motivating factor in companies opting for more eco-alternatives, but it’s possible businesses will simply rack-up the tax and pass these prices on to the consumer.

What are the PPT Exemptions?

Four categories of packaging components are exempt from the new Plastic Packaging Tax, regardless of the amount of recycled plastic they include.

  • Plastic packaging that has been manufactured or imported for use in the immediate packaging of licensed medical or pharmaceutical products
  • Packaging used to carry imported goods safely into the UK
  • Packaging used in aircraft, ship and rail goods stores
  • Permanently designated as designated for non-packaging use

These exemptions may be small and specific; the overall theme here is, if it is non-essential, superfluous and single-use plastic packaging, it’s likely to be taxable.

Summary

The Plastic Packaging Tax in the United Kingdom is the most recent incentive under the new measure to reduce plastic waste and not to be taken lightly. While the importer or maker of packaging components is principally responsible for PPT, others in the supply chain can be held secondary or jointly and severally liable for the tax if they knew or should have known that PPT was not paid. Due diligence might be especially challenging when it comes to imported packaging and each business must determine which controls are necessary, reasonable, and proportionate in light of their particular circumstances.

Businesses will need to maintain records of their due diligence checks. This is in addition to the documents that firms must maintain for PPT. A helpful checklist can be found at https://www.gov.uk/guidance/record-keeping-and-accounts-for-plastic-packaging-tax

 

With all of this, there is hope that businesses will be incentivised to make the change to eco-conscious alternatives in packaging their products. With more awareness about the aims and scope of the PPT, consumers and businesses may finally make long-term commitments to using sustainable tax-free solutions. Join our customer-base today  for updates about new products to suit your plastic-free packaging needs.

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