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August 13, 2021
2021-1511

UK issues updated Plastic Packaging Tax guidance for business

On 12 August 2021, the United Kingdom (UK) tax authorities, Her Majesty's Revenue and Customs (HMRC) issued updated Guidance for businesses about how they should now prepare for complying with the new Plastic Packaging Tax. The further information guidance about key aspects of the tax, including registration obligations and definitions, was also updated. The Guidance is aimed at businesses that manufacture or import plastic packaging into the UK, including those that import packaging that already contains goods.

Background

The UK's Plastic Packaging Tax will take effect from 1 April 2022.1 The tax will apply to plastic packaging manufactured in, or imported into, the UK where the plastic used in its manufacture is less than 30% recycled. The rate of the tax will be £200 per metric tonne of plastic packaging.

The tax aims to encourage the use of recycled rather than new plastic within plastic packaging. It is hoped that this will, in turn, stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.

Guidance

The updated Guidance covers important details for businesses relating to record keeping, registration for the tax and invoicing. However, as the legislation for Plastic Packaging Tax is not yet law, businesses should be aware that some details may change, and HMRC has indicated that it will provide further updates later in the year before the tax comes into effect.

However, although the tax is not yet in force, HMRC stresses that affected businesses should act now to make sure they have the necessary information and invoicing and reporting system requirements to comply with the new provisions. These requirements may apply to businesses that do not need to register and charge the tax and even to businesses that purchase plastic packaging who may become jointly and severally liable for any tax due that has not been accounted for by their suppliers.

Read more about plastic taxes in this EY article, Why tax and finance functions must pay heed to plastic taxes.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United Kingdom), London

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ENDNOTE

  1. Earlier HMRC communications on this topic include:
    1. Introduction of Plastic Packaging Tax from April 2022
    2. Draft legislation: Plastic Packaging Tax
    3. Further information for businesses
    4. Plastic Packaging Tax: policy design
    5. Policy Paper - Introduction of Plastic Packaging Tax
 

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