ICAEW.com works better with JavaScript enabled.

Plastic Packaging Tax: all you need to know before April

Author: ICAEW Insights

Published: 13 Jan 2022

The Plastic Packaging Tax comes into force in less than three months. ICAEW, in partnership with RSM, outlines the essentials.

The UK’s Plastic Packaging Tax (PPT) comes into force on 1 April 2022 – less than three months away. Businesses producing or importing packaging made of mostly virgin plastics (ie, if less than 30% of the plastic is recycled) will be required to pay PPT.

The rate of PPT will be £200 per metric tonne on any plastic packaging that’s deemed to be chargeable, with some exemptions and exclusions. As explained in an on-demand webinar hosted by RSM on behalf of ICAEW, this is a relatively low rate, which gives some indication of the intention behind PPT. 

“This isn’t a tax designed to generate huge tax takes,” says Richard Holm, indirect tax director at RSM UK. “Instead, it’s a tax that’s designed to change behaviour through taxation as part of the government’s ESG agenda.”

Because importers and manufacturers of plastic packaging are required to pay PPT, all manufacturers and importers need to register with HMRC unless they are below the threshold of 10 metric tonnes over a 12-month period. If an importer or manufacturer’s plastic packaging contains a high level of recycled plastic, they may still need to register and consider the implications of PPT.

On the webinar, Holm and his colleagues Jacqui Baker, head of retail, and Grace Smith, indirect tax manager, discuss the nuances of PPT, including what is and isn’t exempt, how to determine what counts as plastic packaging, and cases where plastic isn’t the only material used within the packaging.

For example, if a manufacturer produces packaging that contains plastic and cardboard, it would qualify for PPT if plastic was the heaviest component by weight. If a 100g box contained 60g plastic and 40g of cardboard, it would be considered a plastic packaging component. 

“It’s an all or nothing, so either it is a component or it’s not,” says Smith. “If you have several components, you need to look at whether plastic is the heaviest single component compared to the weight of all of the other components.”

There’s a 12-month look back with PPT; if the entity has imported or manufactured more than 10 tonnes over the previous 12 months, it will be required to register with HMRC for PPT within 30 days. This will not apply for 2022, says Smith.

“For the first year, you don’t have to look back the full 12 months; you only look back to the first day for 2022. You’re not required to look back prior to when you needed to start keeping the record. So for example, at the end of July [this year], you wouldn’t look back to July 2021, you’d only look back to 1 April 2022.”

Recommended content

A megaphone
Stay up to date

You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.

Sign up
Daily summaries
Three yellow pins planted into a surface in a row
News in brief

Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.

See more