An Overview of the Plastic Packaging Tax
What is the Plastic Packaging Tax?
The Plastic Packaging Tax came into effect on April 1, 2022. The tax is intended to provide a financial incentive encouraging the use of recycled material in the manufacture of plastic packaging. It applies to plastic packaging items produced in (or imported into) the UK that do not contain at least 30% recycled plastic.
What are the definitions of plastic under the Plastic Packaging Tax?
Plastic – Plastic means a polymer material to which additives or substances may have been added. Plastic includes polymers that can be biodegradable, compostable and oxo-degradable.
Packaging – A product of which the purpose and function is containment, protection, handling, delivery or presentation of contents. For the full scope of products affected by the Plastic Packaging Tax, click here.
Plastic packaging – Plastic packaging is defined in legislation as packaging that is predominantly plastic by weight. If a component is made from multiple materials, but contains more plastic by weight (including additives) than any other substance, it will be classed as a plastic packaging component.
Pre-consumer recycled plastic vs post-consumer recycled plastic (PCR plastic)
Pre-consumer recycled plastic is recovered from waste generated in a manufacturing process and subsequently processed for re-use.
Post-consumer plastic is generated by the end user of the product; the product can no longer be used for its intended purpose. The packaging item has then been collected and the material re-processed to form polymer suitable for use in a manufacturing process.
Who is liable to pay the Plastic Packaging Tax?
Any company manufacturing plastic packaging in the UK or importing plastic packaging items into the UK, then supplying it to the UK market is liable directly to HMRC for the Plastic Packaging Tax regarding products that are within scope. Liability starts when the weight of plastic packaging manufactured or imported reaches the rate of 10 tonnes in a 12-month period.
In the standard case of products supplied to UK customers by Cambrian, the entity responsible for making payment to HMRC is either Cambrian or a company higher up the supply chain.
Will the tax affect plastic packaging costs?
The tax is an additional cost borne by companies that are liable, so it is incorporated into calculations on pricing and passed down the supply chain.
What steps can be taken to reduce costs?
The only options are to use plastic packaging that contains at least 30% recycled plastic in its manufacture or otherwise consider the use of materials other than plastic. The first option will be far less disruptive to current packaging purchasers.
What is the tax rate?
The tax is currently applied by weight at £210.82 per tonne. (£0.0002 per gram). However, the legislation includes provision for the rate to be amended at a later stage. Please note that the tax figure is not in any way related to the cost of the item at any stage of the supply process.
Note: It is important to note that the Plastic Packaging Tax applies to each plastic packaging component separately. Packaging items are considered as separate components, so a bottle or container and a cap or dispenser that is used to complete the packaging constitute two items, not a combined single item.
Are there any exemptions?
Are products supplied by Cambrian liable for the Plastic Packaging Tax?
Careful research has been carried out and the conclusion is that Cambrian products containing minimum 30% PCR by weight are exempt from PPT, while products not meeting this criteria are in scope of the tax.
We confirm that Cambrian Packaging will fully comply with all aspects of the requirements relating to the Plastic Packaging Tax including meeting our responsibilities on accounting for quantities and weights of products supplied and our liability to pay the tax as appropriate.
In the interests of transparency and to help customers in keeping records, we intend to revise invoices to show the units purchased by product, the weight per unit and the PPT cost per unit. The PPT cost will be incorporated into the invoice total. HMRC confirms that VAT is applicable to the total cost. Where a product is out of scope of the tax, such as those in our ZER0 range, the PPT detail will show a nil entry.
What can Cambrian do to help?
We have been expanding our ZER0 range – bottles in this range are manufactured using 30% recycled material, so they are not subject to the tax and the associated costs. We also offer our Ecycle™ range, where 100% of the polymer used in the manufacture of these bottles is PCR – Post-Consumer Recycled.
We’ll be pleased to discuss the options with you; where the required quantities make it feasible, it will often be possible to specify manufacture of an existing packaging item in 30% recycled material. On smaller requirements we can support you with alternative products.
Further information and actions:
For more information about how we can help your brand to achieve its recycled packaging targets, call our experts on 01686 611 360.
Tip: We also stock some products made with Ecycle™ which is totally Plastic Packaging Tax exempt as this material is fully recycled HDPE. View our range of products exempt from the tax by clicking the button.
For more information about how we can help your brand to achieve its recycled packaging targets, call our experts on 01686 611 360. #AskCambrian
Tip: We also stock some products made with Ecycle™ which is totally Plastic Packaging Tax exempt as this material is fully recycled HDPE.