What is the aim of the PPT?
- PPT is an environmental tax designed to provide a financial incentive for businesses to use recycled plastic in the manufacture of plastic packaging.
Who could be affected by PPT?
- Businesses that manufacture or import plastic packaging, including if you import packaging which already contains goods.
- Examples might be retailers that import products such as bin liners and fizzy drinks, publishers that import plastic used for laminating books, fresh food producers, manufacturers and transport providers that import plastic like bubble wrap for transport.
- Other businesses in the supply chain will also have to be aware of the tax and may have due diligence obligations.
When did PPT come into effect?
- From 1st April 2022.
How much is PPT charge?
- The rate of the tax will be £200 per metric tonne of plastic packaging.
- For example, if you manufacture 10 tonnes of plastic packaging, and 1 tonne contains less than 30% recycled plastic, you will need to pay £200.
Who is liable to pay the PPT?
- The importer or UK manufacturer of packaging components is primarily liable for PPT.
- Others in the supply chain can be made secondarily liable or jointly and severally liable for the tax where they know or ought to have known that PPT has not been paid.
- Examples: those businesses involved in transporting or storing products and operators of the online marketplace or fulfilment businesses.
How will PPT operate?
- If you are a business that manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period, you will need to register for the tax. This is regardless of whether you will have to pay any tax.
- A non-UK resident business that uses a Third Party to import 10 or more tonnes of plastic packaging into the UK will also have to register.
- The online service to register and pay is now available.
- A business must register if:
a) At any time after 1 April 2022, it expects to import or manufacture at least ten tonnes of plastic packaging in the following 30 days or
b) It has manufactured or imported at least ten tonnes of plastic packaging in a 12-month period ending on the last day of a calendar month. In the first year of the tax, a business only needs to register for the tax when the amount of plastic packaging exceeds ten tonnes in a 12-month period from 1 April 2022.
- Quarterly returns will be required.
- A fixed penalty of £500 for failing to comply could be imposed. Continued failure to comply could result in a daily penalty of £40 per day.
- The tax will apply to plastic packaging manufactured in or imported into the UK, where the plastic used in its manufacture is less than 30% recycled.
- This includes imports of packaging which already contain goods, such as plastic bottles filled with drinks.
- Where the packaging imported already contains other goods, the tax only applies to the plastic packaging itself.
- Plastic includes bioplastics, including biodegradable, compostable and oxo-degradable plastics.
- Products will also be subject to PPT if they are designed as single-use packaging products for use by a consumer or user in containing any commodity or waste. This will mean that plastic bags, bin liners, nappy sacks, disposable cups and the like will be subject to PPT.
- A plastic packaging component is chargeable only when it is ‘finished’.
Are there any exemptions or deferrals available?
- Where 30% or more recycled plastic is used, no tax will be due.
- Where plastic packaging is intended for export, payment of the tax can be deferred for up to 12 months as long as the direct export condition is met.
- If the direct export condition is not met, PPT will become due on the packaging from the date when the condition was no longer met.
- For example, the date when the packaging was no longer intended for export, or the 12 month deferral period, has elapsed – whichever is the sooner.
- If the packaging is exported within the 12-month period, the liability for PPT is cancelled.
- Businesses that have accounted for PPT on packaging that was intended for the UK when it was manufactured or imported, but is subsequently exported from the UK, can claim a tax credit.
- Where the packaging function is secondary to the storage function. E.g. Glasses cases or DVD cases.
- Where the packaging is an integral part of the goods. E.g. Printer cartridges or tea bags.
- Where it is designed primarily to be reused for the presentation of goods.
- Transport packaging on imported goods. E.g. Shop fittings or sales stands.
- Packaging used in aircraft, ship and rail goods stores.
- The immediate packaging of a medicinal products. (N.B. veterinary medicine products are not exempt)
- Plastic packaging components that are permanently designated or set aside for use other than for a packaging use.
What sort of records should be kept?
- The 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.
- The weight of exempted plastic packaging and the reason for the exemption.
- The amount in weight of plastic packaging exported, and therefore the allowed relief from the tax.
- For imported plastic packaging, details of its recycled plastic content must be obtained from the overseas manufacturer by the liable business in the UK.
Why is it important to keep proper records?
- If you are a business that manufactures or imports plastic packaging, even if it is less than 10 tonnes a year, you will need to keep records of the packaging you manufacture or import.
- Plastic packaging is assumed to not meet the recycled content test unless it can be shown that it does.
- If you are a business that supplies recycled plastic, your business customers may want more information from you about the types and quantities of material you supply to them.
- If you are a business that buys plastic packaging on which the tax should have already been paid, you may need to check that this is being properly accounted for to avoid the possibility of being held liable for any unpaid tax yourself.
- Supply chain due diligence will be required.
Other things to consider?
- Plastic packaging tax needs to be taken into account in contracts as suppliers or importers of plastic packaging components will want to be able to pass on the cost of PPT to their customers.
- New contracts need to factor PPT into the pricing and should specify whether prices are inclusive or exclusive of PPT.
- The new tax will result in practical and administrative challenges for many sectors, including food and drink, cosmetics and pharmaceuticals as well as those actually manufacturing packaging.
- Tax teams will need information from other parts of the business to calculate whether PPT is due and if so, how much tax is payable.
- System changes may be required if data which is needed is not already collected.
If you wish to discuss the Plastic Packaging Tax or other issues, please do contact us.