Last reviewed 26 November 2020

The government is moving forward with a new tax targeting virgin plastic. Taking effect in April 2022, the tax will apply to the production and import of all predominantly plastic packaging containing less than 30% recycled plastic.

This legislation aims to incentivise the use of recycled plastics, as well as to drive recycling technologies in the UK and to potentially divert plastic waste from landfill or incineration. Each tonne of predominantly plastic packaging that does not meet the requisite 30% threshold will be taxed at £200. The 30% threshold was first proposed at Budget 2018.

To insulate smaller businesses from disproportionate administrative costs as an effect of these changes, the government has exempted companies importing or manufacturing less than 10 tonnes of plastic packaging per year. The government has also made an exemption for the immediate packaging of licensed human medicines.

The £200 per tonne tax has been hailed as potentially having the most significant impact on the waste and recycling sectors since the introduction of landfill tax. However, while the government has predicted that the tax will generate £695 million in revenue by 2025, no indication was given that those funds would be used for development in recycling or to mitigate the effects of plastic waste on the environment.

Commenting on the proposed plastics packaging tax announced in the budget, Helen McGeough, Senior Recycling Analyst, at marketing intelligence group, ICIS, highlighted concerns that the UK market is not set up to process the volumes of material needed to meet recycled content targets.

“The introduction of such as tax is intended to boost the use of recycled material.  However, in the case of the UK the capacity to produce recycled plastics is not sufficient to meet 30% recycled target,” McGeough said.

When finalised, the legislation can be expected to be included in the Finance Bill 2021. Full details of the new plastics tax and who is likely to be affected are available on the government website here.