New regulations have been published to amend the definition of packaging and the various products that will be subject to the new Plastic Packaging Tax from April 2022.
HM Revenue & Customs has also issued new guidance on record keeping.
]Watch our Plastic Packaging Tax webinar held in March 2022.]
From 1 April 2022 the Plastic Packaging Tax applies to manufacturers and importers of plastic packaging that contains less than 30% recycled plastic.
The tax will NOT apply to manufacturers and importers of less than an 10 tonnes of plastic packing per year.
The rate of the tax will be £200 per metric tonne of plastic packaging.
Those affected will need to keep records and, in most cases, register for the tax, even if all the packaging you manufacture or import contains more than 30% recycled plastic.
These new regulations follow on from a consultation in 2021, removing three existing product categories from the definition of packaging and adding one new category.
The primary legislation for Plastic Packaging Tax is in part 2 of Finance Act 2021
You will need to register if you are a business manufacturing or importing 10 or more tonnes of plastic packaging over a 12-month period, regardless of whether you will have to pay any tax.
This includes importers of business packaging which already contains goods, such as plastic bottles filled with drinks.
Where the packaging you import already contains other goods, the tax only applies to the plastic packaging itself.
A registered business will need to pay Plastic Packaging Tax on any business packaging that contains less than 30% recycled plastic.
The tax will be charged at £200 per tonne.
For example, if you manufacture 10 tonnes of plastic packaging, and 1 tonne contains less than 30% recycled plastic, you will need to pay £200.
The online service to register and pay will be available on 1 April 2022.
The GOV.UK website has more information about registering for Plastic Packaging Tax.
A group of companies can simplify the administration and payment of the tax by appointing a UK established representative member of the group to submit returns and make payments on behalf of companies in the group.
Each company in the group must meet the 10 tonne threshold to be accepted for a group registration.
A business that manufactures or imports plastic packaging, even if it is less than 10 tonnes a year, will need to keep records of the packaging products manufactured or imported.
Plastic packaging is assumed to NOT meet the recycled content test unless it can be shown that it does.
The record keeping requirements are less for a business that manufactures or imports less than 10 tonnes of plastic packaging a year, although some records will still need to be kept.
If you are a business that supplies recycled plastic, your business customers may want more information from you about the types and quantities of material you supply to them.
The tax is intended to encourage greater use of recycled plastic.
Businesses can start to make changes to the packaging products they manufacture or import so that they include at least 30% recycled plastic. This will ensure they are outside of the tax.
However, records will still need to be kept and a business may still need to register in respect of the plastic packaging manufactured or imported.
If you are innovating to develop new packaging solutions to replace plastic use in your business, subsidy may be available via the R&D Tax Credit regime.
Check out our R&D Tax Credit Knowledge Hub for more information about the regime.
Records will need to be kept that are sufficient to show how much tax is payable, or to confirm that there is no tax to pay.
That means keeping evidence of how much recycled plastic is in the packaging manufactured or imported.
Where plastic packaging is imported, you will need to check whether you have all the information you need about the materials used to make it. This is better done sooner rather than later.
Even if you manufacture or import less than 10 tonnes of plastic packaging a year, you will still need to keep sufficient evidence to show that you are below the tax threshold, and to be able to assess if you become liable at a future date.
Where you do not account for the tax on plastic packaging supplied to businesses, including via fulfilment houses, these businesses may be found to be secondarily or jointly and severally liable for any unpaid tax with you.
Where a business buys plastic packaging on which the tax should have already been paid, it will need to check that this has been done to avoid being held liable for any unpaid tax.
The GOV.UK website has more information about record keeping requirements.
Although further guidance is awaited, manufacturers or importers of plastic packaging will need to include a statement on their invoices to confirm that the tax has been paid.
The tax paid should be clear to business customers.
A non-resident taxpayer importing plastic packaging into the UK will need to register and account for any tax due. That means keeping sufficient evidence to back up the tax position.
Where tax is not paid by the non-resident taxpayer, businesses in the supply chain may later be found to be secondarily or jointly and severally liable for any unpaid tax.
Exporters can defer paying the tax for up to 12 months from the point of manufacture or import.
The tax does not have to be paid where the goods are then exported within that 12-month period.
An exporter can obtain a credit for any packaging exported against any tax for which they become liable.
Sufficient records will need to be kept to support any claim to defer the tax on goods intended for export, or to ensure that a credit can be claimed if the goods are subsequently exported by someone further down the supply chain.
The following actions can be taken to prepare for the tax:
Check out our May 2021 webinar on the new tax, where we discuss with industry experts some of the finer details.
Visit our Food & Drink Knowledge Hub for advice and information about the tax and other issues affecting the food and drink sector.
If you would like to discuss how the tax will affect your business, please contact a member of our Food & Drink team.