Who is responsible for the plastic packaging tax?

A new tax on plastic packaging has taken effect on April 1, 2022. The charge is intended to minimise the quantity of plastic packaging that does not include at least 30% recycled plastic.

Liability

The tax is imposed on the packaging that is mostly made of plastic and does not contain at least 30% recycled plastic by weight. Plastic packaging manufacturers and importers are subject to this tax. The tax is imposed either when the packing component is completed or when it is imported.
However, in order to avoid a disproportionate administrative burden, it only applies to those that produce or import at least 10 tonnes of plastic packaging within the tax’s scope each year. The Gov.UK website has information on what constitutes plastic packaging for the purposes of the levy.
The tax is imposed at a rate of £200 per tonne where it applies.

Registering

From April 1, 2022, manufacturers and importers who are subject to the tax must register with HMRC. This may be done over the internet. A company must register if it has made or imported 10 tonnes or more of plastic packaging within the tax’s scope, or plans to do so within the next 30 days. As a result, it is required to look both backward and forwards when establishing whether a registration obligation exists. There is no need to go back before April 1, 2022, because the tax is only in effect for the first year.
When the threshold of 10 tonnes is met in the preceding 12 months, the need to register begins on the first day of the month after the threshold is reached. Within 30 days, registration must be completed.

Example

Each month, a company produces 4 tonnes of plastic packaging that contains less than 30% recycled plastic. They will have produced 12 tonnes of packaging since April 1, 2022, by June 30, 2022. Because the 10-tonne barrier was achieved on June 30, 2022, the need to register begins on July 1, 2022. The company must register by July 30, 2022.
The duty to register arises from the day that the firm anticipates being obliged to register if it exceeds the 10-tonne barrier in the following 30 days. The company must register again within 30 days.

Example

A typical firm produces 2 tonnes of plastic packaging every month. It receives an order for 15 tonnes of plastic packaging with less than 30% recycled plastic on May 4, 2022. The obligation to register begins on May 4, 2022, and the company must register by June 2, 2022.

Planning tips

The maker or importer is responsible for the tax, not the end-user. They may be able to pass the expense on, depending on price sensitivity. Because the tax only applies if the plastic container contains less than 30% recycled plastic, raising the recycled content to at least 30% will eliminate the tax burden. Moving away from plastic packaging to avoid exceeding the 10-tonne threshold can also get a company out of the levy, boosting its green credentials in the process.