Plastic Packaging Tax

The measure

The government previously announced the introduction of a new UK environmental tax on the production and importation of plastic packaging in Budget 2018. The results of a subsequent consultation were originally due for release as part of Budget 2019 prior to its cancellation.

Today the government confirmed that the plastic packaging tax (PPT) will be implemented from April 2022 and apply to plastic packaging manufactured or imported with less than 30% recycled plastic content. Plastic packaging for these purposes is “packaging that is predominantly plastic by weight”.

The tax will be chargeable at a rate of £200 per tonne and apply to businesses that manufacture/import above a minimum threshold of ten tonnes of relevant packaging. A minimum threshold has been introduced to ensure that small businesses are not disproportionately affected by the tax.

A further consultation has also been announced to determine the design of PPT and how it will be implemented.


Who will be affected?

Businesses that produce or import plastic packaging.

Customers within the plastic packaging supply chain will likely bear the cost of the tax by way of a price increase.

The government envisages the impact to individuals that purchase goods to be minimal on the grounds that plastic packaging typically represents an incidental element, and proportionately low cost, of the goods as a whole.


When will the measure come into effect?

Draft legislation will be published in 2020 for consultation, with legislation expected to be introduced in Finance Bill 2020. The tax will take effect from April 2022. 

Our view

The government’s announcement that PPT will be implemented confirms the Budget 2018 announcement and aligns with pledges contained in the Conservative Party’s 2019 general election manifesto.

Taxpayers will now be keen to receive further details on exactly how the tax will practically take effect, including the extent to which the regime will include reliefs or exemptions, the reporting mechanism, and detail on applicable tax points.

Affected businesses will have to ensure that their tax reporting systems and processes are able to report any amounts of tax due under the regime. Businesses in the supply chain should also consider and prepare for the commercial implications of PPT-based price rises.