November 16, 2020
UK Government issues details of new Plastics Packaging Tax effective 1 April 2022
The United Kingdom (UK) Government has issued a Policy Paper outlining a new tax, the Plastic Packaging Tax (PPT), to apply to plastic packaging produced in, or imported into, the UK. The tax will apply with effect from 1 April 2022.
For purposes of the new tax, "plastic packaging" is packaging that is predominantly plastic by weight. PPT will not apply to any plastic packaging which contains at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight. Imported plastic packaging will be subject to the tax, whether the packaging is unfilled or filled.
The UK Government has stated that the aim of this new tax is to provide an economic incentive for businesses to use recycled material in the production of plastic packaging, which will create greater demand for this material. In turn, this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfills or incineration.
It has indicated that PPT will affect UK producers of plastic packaging, importers of plastic packaging, business customers of producers and importers of plastic packaging, and consumers who buy goods packed in plastic packaging in the UK. However, there will be an exemption for producers and importers of small amounts of plastic packaging.
Details of the new PPT
The tax will take effect from 1 April 2022 and draft legislation has been published for technical consultation (a draft explanatory note is available here). Key features of the tax include:
The draft legislation also sets out: (i) who will be liable to pay the tax and will need to register with the UK Tax Administration (Her Majesty's Revenue and Customs (HMRC)); (ii) how the tax will be collected, recovered and enforced; and (iii) how the tax will be relieved on exports. Further information may be found in the following:
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United Kingdom), London
PDF version of this Tax Alert