New Plastic Packaging Tax

The plastic packaging tax, announced in Budget 2018, will take effect on April 1, 2022, and will be imposed at a rate of £200 per metric tonne on UK businesses that manufacture or import 10 tonnes of plastic packaging in a 12-month period.

The tax is imposed on packaging that contains more plastic by weight than any other single material, and the definition of plastic includes biodegradable and compostable plastic. Packaging that contains at least 30% recycled plastic, on the other hand, is excluded.

In their latest update, HMRC has clarified when a packing component is finished.  This is significant because, in the case of production in the UK, the company that completes the “last substantial modification” before packing and filling is responsible for the tax.

The importing business is responsible for the tax if it imports a finished plastic packaging component into the UK (including packaging that already contains goods).

The updated guidance now includes a non-exhaustive list of manufacturing procedures that qualify as substantial modifications, such as extrusion, moulding, and printing. It also states that the final significant modification would be one that makes a “significant change to the nature of the packaging component,” including changing its shape, thickness, weight, or structure.

In addition, there are also examples of manufacturing processes that are not considered a “substantial modification” under the legislation, such as cutting individual plastic trays from a larger pre-formed sheet.

Along with the new guidance, HMRC has issued two decision trees to support businesses that remain unsure as to whether they are liable to pay the tax. The first allows you to check whether packaging you manufacture, or import, is in scope and the second checks whether you are liable to and need to register for the tax.

It is important to note that you may need to register for the tax and keep records on packing manufacturing and import, even if you are ultimately not liable to pay any tax. If you import or manufacture less than the 10-tonne threshold you will also be subject to record-keeping requirements to evidence you do not breach the threshold.

Find out more