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April 20, 2022
2022-0649

UK Tax Authority issues further guidance on UK Plastic Packaging Tax

The United Kingdom (UK) Tax Authority, Her Majesty's Revenue and Customs (HMRC) has contacted businesses with a reminder that the UK's new Plastic Packaging Tax (PPT) came into force on 1 April 2022. The message provides the latest information together with relevant links.

PPT returns, registration and records

  • HMRC confirms that there will be no requirement to file a PPT return or pay the tax before. July ‌‌2022 at the earliest; however, businesses may need to register for PPT before this point.
  • PPT has a 10-ton registration threshold and there are two tests to check if a business needs to register.
    • A business must register for PPT on GOV.UK if it has manufactured or imported 10 or more tons of plastic packaging since 1 April 2022.
    • If it expects to manufacture or import 10 or more tons of plastic packaging in the next 30 days.
  • The HMRC Guidance provides further information on what plastic packaging should be included in calculating the 10-ton threshold.
  • Worked examples of passing both threshold tests are available on GOV‌.UK at Examples of tests and calculations for PPT.
  • Plastic packaging containing less than 30% recycled plastic is taxed at £200 per ton.
  • If a business is over the registration threshold and already includes 30% or more recycled plastic material in its plastic packaging, it must register for PPT but will not pay any tax.
  • Once a business becomes liable for PPT, it must keep accounts and records to use as evidence to complete its quarterly tax returns for PPT.

Importers

Businesses importing plastic packaging into the UK (including filled packaging) need to check who is responsible for complying with and paying PPT. This is unlikely to be the overseas supplier. For example, a UK-based retailer imports goods from a German food manufacturer; the retailer is the consignee and in control of the import, so it must register for the tax if it passes the 10-ton registration threshold.

If a business imports finished plastic packaging components using incoterms, it should agree with the other business who is responsible for including the details on its PPT return and paying the tax.

Guidance

Two step-by-step documents are available to assist businesses in understanding the tax and what plastic packaging products are in scope. These now provide additional clarity for importers of plastic packaging:

Guidance for PPT is available at HMRC's collection page. This is regularly updated to address frequently asked questions. Recent changes include:

  • The registration and group registration guidance pages have been amended to include links to the start page of the IT service
  • The PPT force of law guidance is now available. This provides the necessary legislative provision for the detailed administrative arrangements of the tax that have already been set out in guidance elsewhere, such as standard weighing methods
  • The recycled plastic and reprocessing guidance has been amended to make it clear that pre-consumer plastic can be included as recycled material where it needs to be reprocessed in order to be used
  • The link for businesses to make complex inquiries to HMRC where the answer isn't covered in the guidance has been added to the Plastic Packaging Tax collection page and Plastic Packaging Tax: steps to take

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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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