Plastic Packaging Tax: are you ready?

One of the biggest changes to consider as part of your packaging strategy over the next decade is the UK government’s Plastic Packaging Tax, which comes into effect in April 2022. Our Covid-19 research update found that, currently, less than a third (28%) of businesses are prepared to meet the UK’s Plastic Packaging Tax.

The Plastic Packaging Tax will apply to any business manufacturing or importing more than 10 tonnes of plastic packaging per year (including on finished products), as of April 2022.

Businesses will be required to either prove that their packaging has greater than 30% recycled content, or pay tax at a rate of £200 per tonne. This tax is completely standalone from producer responsibility regulations, so will be an additional cost rather than a replacement of the PRN system.

Martin Hyde, Policy Leader at environmental compliance scheme Comply Direct Ltd, provides key considerations for businesses to ensure they’re ready to meet the requirements.

Purple background with statistic 28% of businesses are prepared to meet the UK's plastic tax which comes into effect in April 2022.

Establish your liability
The first business to “commercially exploit” plastic packaging in the UK will be considered the liable party. However, due to the presence of joint and several liability for this tax, it is important that all supply chains identify whom should be the “tax payer” of the product handled.

Identify the potential costs
Whilst the direct cost to liable parties whom cannot evidence 30% recycled content is £200 per tonne, there is also an indirect cost expected in the way of increased material / product prices as well as the administrative costs of measuring and reporting against the tax.

Consider how to measure / evidence recycled content
HMRC has suggested several methods to demonstrate recycled content. Being aware of which methods best suit your business (and those which are most viable) will ensure you can gather the data necessary to demonstrate recycled content where it is achieved.

Minimise, replace or remove where possible
Where 30% recycled content cannot be achieved or demonstrated, businesses should look to either replace the material for alternatives, minimise the weight per item or remove the packaging altogether if possible, to reduce costs.

For more insight into your company’s packaging strategy, download your copy of the Future of Packaging Report: Covid-19 update here.