When you’re concentrating on running your business and building your empire, it can be super tricky to find the time to stay on top of all things tax. However, if you find yourself out of the loop with the latest updates, you run the risk of not paying categories of tax you may very well be liable for.

Plastic Packaging Tax (PPT) is a relatively new type of tax introduced in April 2022 that you might not be aware of, but could potentially be liable for. Don’t worry though, we’re here to help you figure it all out.

What is Plastic Packaging Tax?

It’s estimated that 5,000 items of marine plastic pollution can be found per mile of beach across the UK alone. It’s also estimated that one bin lorry of plastic is discarded into the world’s oceans every single minute. It comes as no surprise then, that consumption and waste of plastic is having a colossal impact on climate change and global warming.

One of the ways the UK government is helping tackle the problem of plastic pollution is by introducing Plastic Packaging Tax (PPT). This is an environmental tax designed to reduce the use (and waste) of non-recycled plastic and single-use plastic in product packaging.

 
It aims to motivate increased use of recycled plastics and therefore:

• Reduce the amount of single-use plastic in circulation
• Increase demand for recycled plastic, incentivising more recycling initiatives
• Reduce the amount of waste plastic ending up in landfill or incineration

Who needs to register for Plastic Packaging Tax?

The government’s overarching guidance on the matter is that if you manufactured or imported 10 tonnes or more of plastic packaging since 1 April 2022, you may need to register for Plastic Packaging Tax.

Of course, tax is never completely straightforward, so there are further specifics on who is liable for PPT as well as some exemptions.

You will need to register for Plastic Packaging Tax and pay PPT if you are a manufacturer or importer who falls into either (or all) of the following categories:

• If you have imported into the UK, or manufactured in the UK, 10 tonnes or more of finished plastic packaging components in the previous 12 months (assessed on the last day of each month)
• If you expect to import more than 10 tonnes of finished plastic packaging components into the UK within the next 30 days
• If you expect to manufacture more than 10 tonnes of finished plastic packaging components in the UK within the next 30 days

You need to register within 30 days of meeting the 10 tonnes threshold, and if you fail to meet this deadline, you could incur a financial penalty.

What are finished plastic packaging components and modifications?

Plastic Packaging Tax only applies to finished components or finished products. For tax purposes, the government considers it to be ‘finished’ if it’s already filled with goods, in which case it’s treated as a finished packaging component, and you’ll be liable for the tax.

So, if you’re a manufacturer, or if you import unfilled plastic packaging, you’ll need to work out when the packaging component is finished.

A packaging component is considered ‘finished’ only once it has been through its final substantial modification. Whoever carries out the final substantial modification, before the packing or filling of packaging, is the business (or person) liable for PPT.

A substantial modification includes any process that changes the product’s shape, structure, thickness or weight.

Is biodegradable plastic subject to Plastic Packaging Tax?

In some cases, maybe. For the purposes of working out if Plastic Packaging Tax applies, a plastic is a polymer material which may contain additives or other substances. It can include polymers which are biodegradable, compostable, or oxo-degradable.

A cellulose-based polymer won’t be treated as plastic for PPT as long as it has not been chemically modified. Those that have been chemically modified are considered plastic.

How to register for Plastic Packaging Tax

You should use your Government Gateway account to sign in and register online for Plastic Packaging Tax.

To register, you’ll first need information about the quantity of plastic packaging you:

• Expect to manufacture or import in the next 12 months, or;
• Have manufactured or imported since 1st April 2022, or;
• Expect to manufacture or import in the next 30 days

You’ll also need the following to hand:

• Your business type
• Business address and contact details
• Your Government Gateway user ID and password (or you can set one up when you register)
• A reference number, which could be any of the following: company registration number, National Insurance number, Unique Taxpayer Reference or charity registration number.

Are there any exemptions to Plastic Packaging Tax?

As the current regulations stand, there are four types of packaging components that are exempt from Plastic Packaging Tax, irrespective of the quantity of recycled plastic they contain. They are:

• Plastic packaging manufactured or imported for use in the direct packaging of medicinal goods (e.g., products used to prevent and treat human disease). This means the packaging immediately in contact with medicinal products.
• Components that are permanently designated for alternative use outside of packaging
• Plastic packaging used for aircraft, ship, and rail stores
• Plastic transport packaging used for imported goods

It’s important to note, however, that even where the first two of these exemptions apply, you still need to take this packaging into account when calculating whether or not you are manufacturing or importing over 10 tonnes of plastic packaging within a 12-month period. This isn’t the case for the second two exemptions on the list above though.

In circumstances where plastic packaging is due to be exported, payment of PPT can be deferred for up to 12 months, providing necessary requirements are met. If the plastic packaging is exported within the 12-month timeframe, Plastic Packaging Tax liability is removed.

 
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