The Plastic Packaging Tax Regulations

The Plastic Packaging Tax comes into effect on 1 April 2022. 

The measures introduce technical changes to relevant provisions of the Finance Act 2021, concerning the Plastic Packaging Tax. The provisions in the Finance Act 2021 came following the government’s call for evidence in March 2018. This is when they first announced in the Budget a new tax on plastic packaging, with less than 30% recycled plastic.

This tax aims to provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, which will create greater demand for this material. In turn, this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration. 

Plastic packaging is typically only used for a short period of time before it is disposed of, and accounts for 44% of plastic used in the UK, but 67% of plastic waste. Recycled plastic packaging is currently more expensive to produce.

The Regulations include:

• Detailed definitions, including on:
  • how to determine whether a packaging component is a plastic packaging component
  • How to calculate the recycled plastic content of a plastic packaging component
  • The definition of "substantial modification" for determining when a plastic packaging component is finished and chargeable (Part 2).
• Provisions on treatment of exports and entitlement to tax credits (Part 3).
  • How to register for the tax, taxpayer obligations in relation to returns and evidence
  • How HMRC will administer the tax (Part 4), record-keeping requirements (Part 5) 
  • Repayment of overpaid tax (Part 6).
• Provisions on 
  • joint and several liability
  • secondary liability (Part 7)
  • applications for group treatment (Part 8).

The requirements on small businesses (employing up to 50 people)

The legislation applies to activities that are undertaken by small businesses. 

The approach taken to minimise the impact of the requirements on small businesses (employing up to 50 people), is to exempt those businesses manufacturing and importing less than 10 metric tonnes of plastic packaging in any 12-month period from registering for and paying the tax. 

Businesses close to the threshold are encouraged to keep some basic records to demonstrate that they fall below this threshold, but in many cases their normal business records should meet this requirement. 

Revenues from the tax, along with those raised from packaging producer responsibility reforms, are intended to be invested to address single-use plastics, waste and litter.