Despite the constant call for environmental protection, the trouble of non-biodegradable materials is not yet fully addressed by the manufacturing locale. Plastic is still ruling industries, and it’s high time we halt its use. We need active governmental measures. It’s time to act, and the UK is leading the way.

As the environmental crisis and use of plastic are drastically soaring, the UK introduced a new tax strategy to minimise its use. As per the regulation, from 1 April 2022 onwards, companies that use more than 10 tones of plastic packaging are entitled to pay a tax of £200 per metric ton. The acronym PPT has been coined for this tax levy. 

This new initiative is a part of the environmental tax that encourages industry leaders to use recycled materials for manufacturing practices. With such a radical move, the government envisages not to improve revenue but instead cut down the usage by diverting single use plastic with recycled plastic.

You might get confused with these new regulations, hence it’s inevitable to seek expert’s help and with Initor Global UK’s tax return services you can get a help you need.

Let us continue on plastic packaging tax and Keep reading to understand new updates and all the necessary details about the plastic packaging tax.

Who will be affected by the PPT(Plastic packaging tax)?

All goods that come under the definition of packaging goods will be affected by the new rule. A packaging component is a material created to use, whether alone or in combination with other goods. It can be utilised in containment, protection, handling, delivery, or presentation of goods at any point by the producer of the goods to the consumer or user. Hence, this includes;

  • Plastic packaging manufacturing companies that import (including the ones that already contain plastic goods such as drinks in plastic bottles) are the chief targets of the new rule.
  • It applies to all UK based plastic production manufacturers where a business person produces it or imports it into the country on behalf of such a person.
  • Moreover, all companies that consist of less than 30% recycled plastic will also be affected by the tax.
  • Apart from this, all compostable and degradable plastics will also come under the rule. However, this notion is still a matter of debate. When we talk about recyclable plastic, please note that we are not talking about organic recycling.

However, there will be certain exemptions. PPT will not be applicable in cases of plastic packing that is used for the following purposes:

  1. Plastic required for licensed human medicines
  2. Transport packaging that gets employed to import goods into the UK. It means that one does not have to incur any cost for the plastic they use for safe and secure transit.
  3. The plastic that gets utilised in aircraft, ships or railway stores for international journeys. It also covers plastic materials for the goods that do not get vacated into the territory of the UK.
  4. All exported goods if they export within 12 months.

Review your current packaging needs and materials! 

Before the launch of PPT, the UK government expected companies to change their manufacturing strategies by reviewing their current packaging techniques and materials. Unfortunately, this is the only solution to escape the heavy tax burden.

So, if you fall into this category, then it is time to analyse your approaches. The current tax applies to all plastics irrespective of the type of plastic packaging you use- be it biodegradable, compostable and oxo-degradable.

If you are using multiple products for packaging, check which packaging component stands at a higher proportion. If it is plastic, then it will be treated under plastic packaging goods. However, the producer or the importer can demonstrate before the HM Revenue Customs that the plastic is not subject to tax and avail any reduction regarding the PPT.

If you have failed to present, then the entire product will be considered a plastic product. It is also necessary to retain records of all the materials used in production and the weight of each good.

Consider new packaging solutions.

If you think this is the right time for innovation, then we couldn’t agree more. Many believe that it will reassure companies to use recyclables and thereby bring the desired effect.

You can introduce paper-friendly bottles to distribute drinks or create durable pouches to carry liquids. Further, to create a circular economy, you can boost the product quality to make it operational for recycling. To cut costs, you can also introduce recycling technologies and adapt new-age infrastructure to replace virgin materials.

As you are aiming for a future-proof business, it is imperative to recycle plastic packaging materials to get tax exemptions and also to reduce pollution. Apart from this, you can even take the next step and start designing products for reuse to enhance your production.

Engage with your suppliers – what are they doing on PPT?

As it is necessary to ensure the entire supply chain minimises the employment of plastic packaging, it is crucial to engage with the suppliers. You can keep track of the amount, quantity and weight of the materials used.

Non-compliance with the tax will incur a penalty of £20,000 or three times your PPT liability, depending upon whichever is greater. Further, there will be a prison sentence of 6 months as a punishment. In case of any minor compliance issues, there shall be a levy of penal charges like a daily penalty for contravening requirements.

Plastic Packaging Tax impact on your business 

The government believes that the new tax will affect about 20,000 packaging companies, both producers and importers. However, there are consequences when progress gets rushed. It will increase the bureaucratic burden and pressurise small businesses in the country.

Along with this, even the well-established companies will get deeply impacted, as it becomes vital to review their entire resource production. As the tax encourages recycled materials, it also assumes that there will be enough recycled materials to finish the production. 

Design your monitoring, control and reporting processes

So, the question is, what can you do about the new tax legislation? Considering the current situation, now is the right time to prepare your business for the tax changes in 2022. The first thing to improve is your monitoring process and revitalise your control and reporting processes. You can approach professionals and seek help to bring systematic changes into your business. You need to keep records of the following:

  1. Keep documents and check on all your purchases and materials used in manufacturing to avoid future complications and penalties. The total amount in weight of materials excluding packaging used for transporting goods needs to be recorded.
  2. You must maintain a record of data and calculations used to decide the packaging components. It means the amount of plastic and the amount of recycled plastic should get summoned.
  3. The weight of the exempted plastic packaging and a record of explanation regarding why it got exempted.
  4. The weight of plastic packaging exported and the consequent relief from the tax.


Plastic Packaging Tax Consultation

If you are confused about the new regulations, it is vital to seek support from expert bodies. Initor Global UK’s financial accounting outsourcing services will allow you to determine your position in this plastic packaging tax strategy and help you comply with the new changes.

Our professionals have tremendous experience in the tax return preparation field. They constantly stay updated with the latest amendments. We help you in the return filing and tax estimation process while ensuring the use of necessary exemptions. Reach out to us to know more!


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