29th Jun 2021
Packaging plays a vital part in ensuring that products arrive safe and secure at their destination. With just 7 months left until the UK’s plastic tax comes into effect in April 2022, we explain and provide advice on how the tax affects exported packaging.
But firstly, let’s re-cap on goods coming into the UK. The UK plastic packaging tax does not apply to transport packaging used in the delivery of goods into the UK. Transport packaging is either:
This means that packaging used to secure the safe transit of products, for example pallet wrap to secure consignments of products to pallets, on imports to the UK will not be liable for the tax. Plastic packaging used only to transport goods within the UK will be liable for the tax, as will unfilled transport plastic packaging imported as an item in its own right. Here’s a little bit more about imported packaging…
Plastic packaging which is intended for UK use when it is imported or manufactured and has the plastic packaging tax accounted for, but is subsequently exported from the UK, may produce an entitlement to a tax credit.
Imports of plastic packaging which have not cleared customs or not in free circulation should not be included in any calculation. Businesses based outside of the UK must be registered for and pay the tax if they import plastic packaging in the UK.
If you are liable for the tax, each quarter businesses who are handling in excess of 10 tonnes of packaging will need to declare to HMRC the tonnage of packaging they have either manufactured or imported and will also have to declare what tonnage has been exported. Which leads us nicely onto how exported packaging will be affected by the tax.
Where plastic packaging is intended for export, payment of the tax can be deferred for up to 12 months as long as certain requirements known as the ‘direct export conditions’ are met. If the direct export condition is not met, the plastic packaging tax will become due on the packaging from the date when the condition is no longer met. For example, the date when the packaging was no longer intended for export, or the 12-month deferral period has elapsed.
If you export packaging it is not liable for the tax or produce and export packaging directly or pack products and export directly, the liability on the tax is low and void so it’s either returnable rebate if it’s already been taxed but if the packaging hasn’t been taxed yet you can make a submission.
Wondering how the rebate system works? We’ve got you covered.
If you export something in the same quarter you are going to make a report to the HMRC on that packaging, you can net it from your submission similar to the PRN system. If it is in a different quarter, you can get a rebate instead, but the problem is only the party who originally pays for the tax on the plastic is liable for the rebate.
Communication across the supply chain has to be strong in order to access any rebates when exporting. Once you have established your liability, you need to determine whether you can evidence recycled content, remove any packaging, and make quarterly submissions. Tax costs are to be paid each quarter.
To prepare your business for the plastic tax we advise taking these three actions; Firstly, establish what plastic items you use, secondly what materials you are using, and finally what liability you are likely to have on the tax.
If you would like further advice about the plastic tax or on your packaging to see whether you are eligible, get in contact with us here