According to GOV.UK, plastic packaging is responsible for 67% of the UK’s plastic waste, with over 2 million tonnes of plastic used every year. From April 2022, the UK government will introduce a new tax on the production and import of plastic packaging that has less than 30% recycled content. If you’re a plastic packaging supplier, manufacturer or distributor, it’s important that you understand and prepare for the incoming tax.
What is the aim of the plastic packaging tax?
The plastic packaging tax aims to increase the demand for recycled plastic by reducing the amount of new plastic produced, sold and wasted. The majority of the UK’s plastic is newly made, not recycled. The constant production of new plastic has a detrimental effect on the environment. The chemical structure of plastic makes them nearly impossible to degrade; polluting our oceans, land and waters.
The government has received backlash from businesses in the industry as they argue recycled plastic is more expensive than new plastic. While the financial stability of your business is paramount, the government wants to encourage businesses to take a new perspective. To consider sustainability and cost as equally important.
How will the tax work?
The details of the tax are not yet fully outlined. The government is still in consultation and working to form the legislation. What we know so far is that the tax would be applied at the point of plastic packaging production or distribution.
Plastic packaging that is imported will be taxed at the point it enters the country or released onto the UK market. Packaging exported from the UK will work on a tax credit system that doesn’t compete with the importing countries’ legislation. Where there are multiple plastic packaging manufacturers, the government is working on joint liability for all parties so businesses can’t slip under the threshold.
The tax would be based on the full weight of the packaging product; at a flat rate set per tonne of packaging material.
How will it impact my business?
If your business manufactures, supplies, distributes or imports plastic packaging you will be liable for the tax. It’s guaranteed that large suppliers and manufacturers will be taxed. However, it’s being considered whether the tax is feasible for small businesses or if it will have a significant impact on their financial stability.
To ensure you’re compliant with the tax, you need to keep records and exercise diligence in following the legislation. This will ensure the amount of your recycled content is in line with requirements. Non-compliance could result in penalties from the government.
How should I prepare for the tax?
If you’re liable for the tax or want to become a more sustainable business, you should begin looking for ways to reduce the amount of new plastic you’re responsible for. You should identify where recycled plastic can replace new plastic. Put procedures in place to achieve this by the time the tax is introduced in 2022.
Think about your financial capabilities. How much would the tax impact your business for every tonne of plastic packaging you supply? If you’re a small business concerned about whether this is feasible for your business in the long-term, keep up to date with the progress of the legislation. You should know whether you will actually be liable for the tax when the government release the next consultation.
What happens next?
The government will release a consultation of all the technical details of the tax in the near future. They will work with Defra to ensure the new legislation is in line with the existing and proposed regulations surrounding packaging producer responsibilities and waste disposal. The government will release a full draft of the plastic packaging tax legislation in 2020. You can stay updated with the legislation on GOV.UK.