Plastic Packaging Tax

Plastic Packaging Tax Overview:

The new Plastic Packaging Tax (PPT) came into force on 1 April 2022 to combat the use of single use plastic and encourage greater reliance on recycled plastics. 

Am I liable for Plastic Packaging Tax

If you produce or import into the UK any plastic packaging that does not contain at least 30 per cent recycled plastic, you may be liable for Plastic Packaging Tax. For the purposes of PPT, the “plastic packaging” is defined as packaging that is predominantly (i.e. more than 50 per cent) plastic by weight. 

If less than 10 tonnes of plastic packaging is manufactured or imported in a calendar year, the PPT is not required.

It is significant to highlight that regardless of whether the plastic packaging is filled or empty, manufacturers and importers will be subject to the fee. For PPT purposes, the plastic bottles or tubs will need to be identified, for instance, if a company imports fizzy beverages in plastic bottles or ice cream in plastic tubs (with less than 30% recycled content).

How much is Plastic Packaging Tax?

The manufacturer or importer of plastic packaging is responsible for paying the PPT, which is charged at a rate of £200 per metric tonne.

What is compliance of Plastic Packaging Tax?

If you’re registered for PPT, you must keep accounts and records to support the information you submit in your quarterly tax returns.

Your accounts must show how you’ve worked out the figures you submit on your return.

Your records must show the evidence to support these figures.

Your accounts and records must:

• be kept for at least 6 years from the end of the accounting period
• record weight in tonnes, kilograms and grams

What Accounts you must keep for Plastic Packaging Tax?

You must keep accounts showing how you’ve worked out each entry on your quarterly tax return. Where relevant, your accounts must include:

• a breakdown of the weight of plastic packaging components finished or imported in each period
• the weight of plastic packaging exported in the period on which the tax was deferred
• a breakdown of the weight of any plastic packaging for which a credit is claimed if the packaging has been:
  • exported
  • converted into new packaging components
• any adjustments or corrections made to previous accounting periods — you must include the date and the accounting period they relate to

You must keep accounts by reference to each ‘product line’ that you produce or import. A ‘product line’ is a group of plastic packaging components produced to the same specification.

You must keep your accounts in writing or digitally for 6 years from the end of the accounting period they relate to.

What Records you must keep for Plastic Packaging Tax?

You must keep records as evidence to support the information you submit in your tax returns.

Your records must be kept by reference to each product line and show:

• evidence of any exemptions from the tax
• the recycled plastic content, if 30% or more of the plastic used in the component is recycled

For example, if you claim an exemption from Plastic Packaging Tax on the basis that the plastic packaging is used for the immediate packaging of human medicine, you need to hold information supporting your claim (such as the license numbers of the medicines involved).

You must keep your accounts in writing or digitally for 6 years from the end of the accounting period they relate to.

Other compliance points for Plastic Packaging Tax

Get in touch with Naail & Co on the expert advice related to;

–       Records for plastic packaging components that contain recycled plastic

–       Records for plastic packaging components you intend to export

–       Records for packaging components which have been exported

–       Records to keep to claim a credit

–       Documents that can be used as evidence for Plastic Packaging Tax

VAT and Plastic Packaging Tax

If you pay Plastic Packaging Tax on plastic packaging components that you have manufactured or imported, you can choose to increase the price you charge for that packaging to help cover the cost of the tax. This is a commercial decision for you to take.

Plastic Packaging Tax is only paid once when the packaging component is finished or imported. It is not passed down the supply chain as a separately identifiable charge like VAT.

VAT will continue to be payable on the whole price charged for the goods you sell according to VAT rules.

If you increase your price of your plastic packaging because of Plastic Packaging Tax, VAT will be payable on the whole of the new price.

When to submit your Plastic Packaging Tax return?

Once you have met the 10-tonne threshold and registered your liability for Plastic Packaging Tax you’ll need to submit a return to HMRC 4 times a year.

Your returns must cover an accounting period. The accounting periods are:

• 1 April to 30 June
• 1 July to 30 September
• 1 October to 31 December
• 1 January to 31 March

You must submit the return and pay any tax due no later than the last working day of the month following the end of the accounting period you are reporting.

For example, your return for the accounting period 1 April 2022 to 30 June 2022 must be submitted to HMRC on or before Friday 29 July 2022.

You must give all weights in kgs and round them down to the nearest kg on your return.

What to include on your Plastic Packaging Tax return?

To complete your return, you will need to know and report the total weights of any finished plastic packaging components that:

• you manufactured in the UK in the accounting period
• you imported into the UK in the accounting period
• you directly exported in the accounting period, or you expect to directly export in the next 12 months
• you manufactured or imported for use in the immediate packaging of licenced human medicines in the accounting period that were not and will not be directly exported
• contain at least 30% recycled plastic content that you manufactured or imported in the accounting period that will not be directly exported
• you have paid tax on in a previous accounting period, that another business has later converted or exported

How to submit your Plastic Packaging Tax return?

You’ll be able to use the online service to submit your Plastic Packaging Tax return from 1 July 2022.

You’ll need to register for the tax first.

First Plastic Packaging Tax return

Businesses that are liable to register, or have already registered, must submit their Plastic Packaging Tax return from 1 July 2022 and pay any tax due no later than 29 July 2022. Agents can apply to submit returns on behalf of their clients.

Further information on Plastic Packaging Tax return

sign up to our live Plastic Packaging Tax webinars.