As environmental concerns have continued to rise up the UK Government’s legislative agenda, its recent initiative to introduce a new plastic packaging tax comes as no surprise.
Draft legislation and details about the proposed tax can now be accessed on the Government’s website. The Government has also released the results of its most recent consultation on the subject. It is expected that the measure will be legislated in the 2021 Finance Bill and come into force on 1 April 2022.
Set out below are the key considerations arising from the draft legislation and the Government’s other publications.
The party liable to pay the tax is either the UK manufacturer of the plastic packaging component or the party on whose behalf it was imported. With a tax rate of £200 per tonne, the Government hopes the measure will financially incentivise the use of recycled material in plastic packaging and encourage higher levels of recycling generally.
Not all plastic packaging is chargeable. For instance, no tax charge is triggered if 30% or more of the plastic used is recycled or if the plastic packaging in question is made up of multiple materials of which plastic is not proportionately the heaviest.
The draft legislation also excludes from the charge cellulose-based polymers that have not been chemically modified.
There is an exemption for businesses which manufacture and/or import fewer than ten tonnes of plastic packaging in a twelve-month period.
Plastic packaging components are also exempt from the proposed tax if they are:
The next step for the Government is to publish draft secondary legislation and guidance. This should include details about the checks on levels of recycled plastic and more examples of substances that will not be treated as plastic packaging components for the purposes of the tax.
Businesses should consider whether their activities fall within the scope of the proposed measures and may want to review whether the recycled content of their current packaging can be increased to 30% or more.