Last reviewed 18 March 2021

A new Plastic Packaging Tax (PPT), which is set to take effect from 1 April 2022 will have a “significant impact on businesses”, the Government has announced.

The £200 tax will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic and is designed to provide businesses a clear economic incentive to use recycled material in the manufacture of plastic packaging, which will create greater demand for this material.

In turn, the new tax is expected to stimulate increased levels of recycling and collection of plastic waste and divert waste plastic away from landfill or incineration.

Early this month, the Government released its policy paper setting out the terms and goals of the tax and to provide clarity on definitions of “plastic”, “recycled plastic”, and “packaging components”.

The tax will not apply to any plastic packaging which contains at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight. To protect small businesses, the Government has included exemptions for companies manufacturing and importing less than 10 tonnes of plastic packaging per year. Other exemptions from the PPT include the immediate packaging of human medicines.

But figures released during Budget 2021 show that the PPT will have a significant impact on approximately 20,000 businesses. One-off costs will include adapting to the new rules, training for staff, registration with HMRC, and developing the required reporting framework to complete tax returns.

On-going costs could include completing, filing and paying tax returns, keeping appropriate records (including those required to claim the export credit), and amending returns. There will also be new registrations and de-registrations each year.

The policy paper estimates that the PPT incentive could increase the use of recycled plastic material in packaging by as much as 40%, saving nearly 200,000 tonnes of carbon between 2022 and 2023 alone. However, the Office for Budget Responsibility has cautioned that this forecast includes a high degree of uncertainty.

Click here for our closer look at the likely impact of this legislation.