Applicable to sole trades, partnerships, and corporate entities alike, the Plastic Packaging Tax (PPT) is a new tax that came into force on 01 April 2022. The aim of the tax is to reduce the import and manufacture of non-recycled or
non-recyclable plastics. As such, the PPT is levied on entities either importing or manufacturing qualifying plastics.
However, to be liable for the tax, you must either import or manufacture 10 tonnes of qualifying plastics within any 12-month period. Alternatively, you will also be liable where you will import or manufacture 10 tonnes or more within the next 30 days.
As the tax was introduced on 01 April 2022, the 12-month test will only look back as far as 01 April 2022. Any imports or manufacturing of plastics before this date will not qualify for PPT purposes.
However, going forward, qualifying plastics will be ‘finished’ plastics. Finished plastics are plastics that have undergone their last substantial modification. Such modifications include changes to the shape, structure, thickness, and weight of the plastic. Other changes, such as labelling, sealing, cutting, or blowing plastics, do not constitute substantial modifications. For importers, it is either the consignee, or more usually the final distributor, that will be liable for the PPT. This is because it will normally be the final distributor that is controlling the order.
It is worth noting that not all types of plastic qualify as finished plastics. For example, cellulose-based polymers that have not been chemically modified, such as viscose, are not qualifying plastics for the purposes of PPT. Moreover, qualifying plastics produced for certain use cases are also excluded. One example is that of a plastic used for long-term storage. Another is a plastic that forms an integral part of a good where that good cannot reasonably be used or consumed without that plastic component.
However, care must be taken for materials with multiple constituents. Where a qualifying plastic makes up more than any other component of a packaging material, all components of that material will count towards the 10 tonne limit.
For example, where a 10 gram carton is made up of 4 grams of non-recycled plastic, 3 grams of aluminium, and 3 grams of cardboard, all 10 grams of that carton will count towards the 10 tonne limit. This is because the 4 grams of plastic constitutes the largest single component of the carton. A consignment of tens of thousands of cartons could, therefore, significantly contribute towards the 10 tonne limit, and to a greater degree than one might initially expect.
Where the 10 tonne limit is reached or exceeded, the levy charged will be £200 per tonne of qualifying plastics. Entities liable for the PPT must register within 30 days of becoming liable. They must also file returns disclosing their liability, and keep records of the kinds of plastics they are importing or manufacturing. Those liable for the tax will also need to develop a robust calculation methodology to correctly determine their tax liability.
Failure to comply with the PPT will lead to penalties. Late payment interest will also be calculated on the outstanding tax from the date it was due.
Full details about PPT tax can be found on HMRC’s website here.
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