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05 October 2021

UK updates guidance on invoicing for upcoming Plastic Packaging Tax

The United Kingdom (UK) tax authorities, Her Majesty’s Revenue and Customs (HMRC) have updated their published Guidance for businesses that must account for the Plastic Packaging Tax (PPT). Specifically, the section “Plan for changes to invoices” has been updated.

For businesses that are responsible for accounting for the tax as the manufacturer or importer of plastic packaging (including businesses that import packaging that already contains goods), the requirement to include a statement with the invoice that the tax has been paid, which was due to commence in April 2022, will be delayed. However, businesses are encouraged to make the PPT that they have paid visible to their business customers, and work with them to try and increase the amount of recycled plastic used wherever possible. 

Also, HMRC states that further information about this requirement will be published in due course and that it will give businesses time to prepare and make any required changes to their systems.

Background

The UK PPT will take effect from 1 April 2022. PPT 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 and businesses will need to keep records and, in most cases, register for the tax, even if all the packaging manufactured or imported contains more than 30% recycled plastic.

Implications

HMRC’s updated guidance states that the requirement to show the amount of plastic tax paid from 1 April 2022 is “encouraged” but will not be mandatory in the initial introductory phase. There has been considerable concern among many businesses about how the amount of PPT paid could be shown on invoices, as accounting processes and systems are adapted for the new tax. The delay to this mandatory requirement is therefore likely to be welcomed by many taxpayers. However, affected businesses should be aware that this requirement is intended to be introduced in the future as the intention is to make the imposition of the tax visible to customers with the aim of transforming the use of plastic packaging materials going forward.

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

Ernst & Young LLP (United Kingdom), London

Document ID: 2021-1801

 

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