Update on plastic packaging tax

Plastic packaging tax is a tax charged at £210.82 per tonne on packaging with less than 30% recycled content which is either manufacture in or imported into the UK. It applies to manufacturers and importers of more than 10 tonnes of plastic packaging a year.

Tax credits for exports

On 9 May a consultation was published to amend the Plastic Packaging Tax (General) Regulations 2022 to bring them into line with published guidance and practice.  The new regulations come into force on 1 July 2023.

Tax credits for exported taxable packaging which you either manufactured or imported in the same period should be claimed in Box 3, alongside any components on which tax is being deferred due to an intention to export in the next 12 months.

Tax credits for exported taxable packaging which you either manufactured or imported in an earlier period (so the tax has already been paid) should be claimed in Box 6, alongside any components which have been converted by someone else.

Penalties

A new guidance page on plastic packaging tax penalties has also been added to HMRC’s guidance collection, which reflects the change made in Budget 2023 to increase the penalties for late payment to 5% of the unpaid amount.

According to HMRC cash receipts data around 18% [1]of plastic packaging tax payments are late, probably due to the complexities associated with plastic packaging tax compliance and the many data sources needed to prepare the calculations.

There are some complicated rules when working out whether a business has reached the 10 tonne threshold and is required to register.

Broadly speaking you need to count plastic packaging which you manufacture in the UK or import into the UK.

You don’t count transport packaging on imported packaged goods, unless it’s only wrapping one item, and you do have to count transport packaging if it’s empty on import, such as a roll of shrink wrap.

Packaging that has been set aside for a non-packaging use also counts towards the threshold.  It can be difficult to comprehend what this means, but this is essentially material that either is or could be packaging, but is not going to be used as packaging.  Some examples of this are silage wrap used in farming, foam which is used for acoustic insulation rather than packaging purposes, and material being sent for testing.

A farmer importing silage wrap, for example, can be caused to reach the threshold for plastic packaging tax registration if the amount breaches 10 tonnes.  It is, however, exempt from plastic packaging tax and does not need to be reported on the return at all.

This may cause complications for some businesses insofar as they can breach the registration threshold due to an exempt item set aside for non-packaging use, which means they need to register for plastic packaging tax.  As such, any other minor imports of packaged goods will need to be reported on the return, which would otherwise be a nil return.

1. Whether or not packaging is recyclable does not matter for plastic packaging tax purposes. The only thing that matters is whether there is any content that has actually been recycled.
2. Even if all the packaging produced or imported meets the 30% recycled content and is not chargeable to plastic packaging tax, businesses that breach the 10 tonne registration threshold still have to register, file quarterly returns and, more importantly, hold evidence supporting the recycled content being claimed.
3. If you import and sell packaged goods rather than packaging itself you are still required to register for plastic packaging tax if there is more than 10 tonnes of plastic packaging on your imports annually.
4. All types of plastic including bioplastics, compostable plastics and soluble plastics count as plastic for the purposes of plastic packaging tax. The only plastic that is excluded is cellulose based plastic which has not been chemically modified.

[1] HMRC tax receipts and National Insurance contributions for the UK (monthly bulletin) - GOV.UK (www.gov.uk)

Approval code: NTAJ14062339