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ENL Explainer: Plastic Packaging Tax

At the start of this month, whilst the headlines were focusing on the increases in personal taxation through National Insurance, another new tax came into operation. This one might not be as high on the agenda of households, but for UK manufacturing businesses and producers of food and beverages, it is a very big deal indeed.

This is the government’s new Plastic Packaging Tax – commonly known as PPT.

Why a New Tax?

Some taxes are primarily designed to raise revenue for the Exchequer whilst others are designed to encourage certain behaviours, from individuals or businesses. PPT falls firmly into the latter category.

“The aim of the tax,” government tells us, “Is to provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, which will create greater demand for this material. In turn, this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.”

It is clear that the aim is that by shifting businesses to use more recycled products, the recycling industry itself will increase its own capacity to support that shift. This will increase the availability and use of recycled plastic packaging across the UK economy.

Environmental Sustainability

The new PPT is part of a wider set of policy initiatives that are designed to reduce the use of single-use plastics, increase recycling rates across UK industry, and drive a step-change in the UK recycling sector itself.

We think this aim is the right one. We have written before about some of the environmental challenges around the use of plastics, and about what we at ENL Group are doing to increase our own recycling rates.

Although no one likes new taxes or the cost and bureaucracy that often surrounds them, responsible manufacturers across the UK plastics industry also know that we have a role to play in supporting a shift to more sustainable ways of working. Plastic is an essential part of all of our lives, and it is impossible to imagine a plastic-free future. Therefore, the aim must be to continue to transform the sector to deliver in a more environmentally conscious way.

However, it is also important to acknowledge that we have already made good progress as a sector. According to the latest data, 77% of plastic bottles are now recycled. This shows what can be achieved when there is an infrastructure in place for recycling, and when consumers and manufacturers work together.

At ENL Group, we believe that PPT can be a valuable tool in helping to deliver a more sustainable plastics sector in the UK.

What Does PPT Cover

PPT applies to any plastic packaging that is produced in or imported into the UK that does not contain at least 30 per cent recycled plastic. Within the legislation, “plastic packaging” is defined as packaging that is mainly plastic – i.e. more than 50 per cent plastic by weight. 

It is important to remember that this applies whether the plastic packaging is empty or in use. For example, if a company is importing soft drinks, then the plastic bottles that those drinks arrive in will need to be declared under the new PPT rules.

How Much Does PPT Cost and Who Pays?

The new tax is payable by the manufacturer or importer and will apply at a rate of £200 per metric tonne. PPT will not be due unless 10 tonnes or more of plastic packaging is imported or produced in a 12-month period.

Which Industries will PPT Affect

This is a very broad question, with an equally broad answer. Plastic is an essential, inescapable part of all of our lives. From the packaging our food is in, to the bags we put sandwiches in, plastic is everywhere.

Similarly, this tax will potentially impact everywhere too – affecting businesses right across the supply chain – from retailers who are importing goods such as bin liners for sale to the public to food manufacturers who use plastic packaging to keep their food fresh. It will also affect the logistics industry, which uses products like bubble wrap and pallet wrap. In short, any company that produces or imports substantial amounts of plastic goods will be impacted and will have to register for PPT.

What is Excluded?

There are some important exclusions to PPT. These include:

  • Plastic packaging for human medicinal products (so medicine bottles)
  • Transport packaging on imported goods
  • Packaging used for stores on international aircraft, ship and rail journeys
  • Plastic packaging designed to be used for the long-term storage of goods (for instance a first aid box)
  • Plastic packaging primarily designed to be reused for the presentation of goods (such as a display shelf).

Companies Using Recycled Plastics

Clearly, there is no tax payable if businesses are manufacturing or using recycled plastic products. However, even if this is the case, those companies still have to register for PPT. This is because PPT registration is mandatory for any organisation that manufactures or imports more than 10 tonnes of plastic packaging, regardless of the amount of recycled plastic they contain. Even if it turns out that no tax is payable, those companies will still need to register for the tax and keep clear records showing where plastic packaging is imported from and confirming, when necessary, the amount of recycled material it contains.  

What Should Businesses Do?

Businesses need to carry out an assessment to decide whether they are likely to be liable for PPT. This process should look not just at what the business does, but also review supply chains where there may be liability that ultimately sits with them. Systems will then need to be developed to ensure accurate record-keeping making sure that you comply with the new rules and avoid any penalties.

About ENL Group

ENL Group is based in Portsmouth, UK and Veľké Kostoľany, Slovakia. Established in 1958, we have been servicing UK-based and European companies for decades. Working with a secure supply chain, ENL provides quality components for quality-driven customers – with full certification for all of our products and quality checking at every stage.

Operating 24/7, we design, manufacture and deliver critical components for our customers across the UK and Europe.

Contact Us for more information about ENL and how we can help your business.