UK Plastic Packaging tax
Plastic Packaging tax was introduced in April 2022 as part of the UK's Green taxation plan. Now, the UK plans to raise the rate by April 2024
Update: UK plastic tax rate increases by April 2024
By April 2024 the plastic tax rate will increase from GBP 200 to GBP 217.85 per tonne. Find the official information here.
Introduction to UK Plastic Packaging tax
Plastic Packaging tax is due in the UK for traders – including non-established companies, manufacturing, or importing 10 tonnes or more of plastic packaging, over a 12-month period.
Companies subject to the tax need to register and start paying Plastic Packaging tax. This obligation started back in 1 April, 2022.
The aim of this tax is to charge for any plastic packaging designed to be discarded once the goods contained in it are consumed or have perished.
These are the main elements of the new UK Plastic Packaging tax:
- Manufacture or import of 10 tonnes or more of plastic packaging, over a 12-month period.
- If 30% or more of the plastic packaging used is recycled, the packaging is not chargeable from the tax. Still, this packaging counts for the amount limit of imported or / and manufactured plastic packaging in a 12 month period, and you must still keep records of it. There are also other exceptions to the chargeability of the tax as well as tax exemptions.
- The tax is charged at a rate of £200 per tonne. However, this rate will increase by April 2024 to GBP 217.85 per tonne.
- Non-established businesses are also subject to this tax.
What do you need to know about the UK Plastic Packaging tax?
Manufacture or import of 10 tonnes or more of plastic packaging, over a 12-month period.
If 30% or more of the plastic packaging used is recycled, the packaging is not chargeable from the tax.
The tax is charged at a rate of £200 per tonne. The rate will be GBP 217.85 per tonne from April 2024.
Non-established businesses are also subject to this tax.
Do you need to import or export from the UK? Learn more about the UK EORI numbers.
What packaging is considered subject to Plastic Packaging tax?
According to the HMRC guide, “plastic means a polymer material to which additives or substances may have been added.”
In case the plastic packaging component is made from several different materials, when plastic is the main substance by weigh, whole component will be classified as a plastic packaging component for the purpose of the tax. See some examples given by HMRC here.
Also, it should be taken into account that Plastic Packaging Tax will be charged for each individual finished packaging component.
We can differentiate 2 types of plastic packaging subject to Plastic Packaging tax, as packaging designed:
- For the use in the supply chain.
- For the use by end consumer.
Some of the functions of the plastic packaging subject to this tax are: contain the goods, protect the goods, handle the goods, present the goods, or deliver the goods. Some examples are plastic bags, disposable cups or plates, film to protect goods such as raw meat.
Both plastic packaging’s for supply chain use and for end consumer use are subject to the plastic tax.
What packaging is exempt from the tax?
The following scenarios present the 4 categories of plastic packaging exempt from the tax:
- When used for the immediate packaging of licensed human medicine – this is a container or any type of packaging in direct contact with a medical product, as defined by HMRC.
- Transport plastic packaging: this includes packaging used to safely import multiple goods into the UK, as well as packaging to avoid damage of the goods during transportation.
- When used in aircraft, ship and rail goods stores.
Also, there are plastic packaging excluded from the tax. In this case there are 3 scenarios to consider:
- Plastic packaging used in the long-term storage of goods, ex: earphone cases.
- Plastic packaging that is an internal part of the goods; ex. Printer cartridges.
- Plastic packaging to be reused for the presentation of the goods; ex. Sales presentation stand.
This exemption does not apply in any case for packaging designed to be discarded once the goods contained in it are consumed or have perished.
Finally, it is possible to defer the payment of the Plastic Packaging tax up to 12 months if the product with plastic packaging is going to be exported.
Plastic packaging tax registration
Businesses must register for the Plastic packaging tax within 30 days since they exceeded the limit of 10 tonnes or more of finished plastic packaging manufactured or imported in the previous 12 months.
Since the tax started in 1 April, 2022, all amounts should be accounted since that day.
Businesses must register for the Plastic packaging tax within 30 days since they exceeded the limit of 10 tonnes or more of finished plastic packaging.
Some of the information that must be provided within the registration application are: business type, business address and contact details, date when the business became liable for Plastic packaging tax, an estimate on the expected amount of finished plastic packaging to be imported or manufactured during the next 12 monhts, as well as a customer reference number – this depends on the type of business.
Plastic packaging tax returns
Returns for Plastic packaging tax will be submitted on a quarterly basis, and the deadline for submission and payment is the last working day of the month following the reporting period.
For example, the first Plastic packaging tax return was for the Q2 2022 reporting period, covering the months of April, May and June 2022, and the return and payment of the tax had to be made no later than 29 July, 2022.
Plastic packaging tax returns are due on a quarterly basis, and must be submitted and paid by the last working day following the end of the reporting period.
Information to be included on the return for Plastic packaging tax is the following:
- Total weight of chargeable plastic packaging components manufactured and imported in the UK during the reporting period (measurement unit = Kg).
- The total weight of finished plastic packaging components not subject to the tax (weight in kgs). It will be required to split the amounts between the different exceptions from taxation available.
- The total value of taxed plastic packaging components which a credit is being claimed for (value in £).
- Box 8 will include the total weight of plastic packaging components which are subject to the tax (weight in kg) after deducting the relevant amounts.
- Box 9 will contain the tax due for the period in pounds. This will be calculated automatically using the amounts introduced on the return.
Penalties and interests may be applied in case of missing a tax return submission, or paying the tax late.
Do you need help?
Marosa can assist you with your queries on plastic tax or VAT compliance in the UK. Our team of VAT experts will be glad to help you.