UK Plastic Packaging Tax - What Does It Mean For Your Business?

By Amber
12th June, 2022

As of 1st April 2022, the UK Government has introduced a new tax on plastic packaging. The aim is to encourage more manufacturers to use recycled materials when producing plastic packaging and more businesses to consider the environment when choosing packaging for their products. 

Any plastic packaging containing less than 30% recycled plastic will be taxed at a rate of £200 per tonne, whether it is manufactured here in the UK or imported.  

The tax is comprehensive and will therefore affect a sizeable proportion of businesses. Even those that meet the threshold for recycled materials and therefore don’t need to pay tax will need to register and provide details of their plastic packaging use – similar to how car tax must be renewed annually even if no fee is due.  

Businesses therefore need to be aware of their obligations and plan ahead to ensure they are compliant.  

Which Businesses Need to Pay UK Plastic Packaging Tax? 

Any business based in the UK that uses plastic packaging or manufactures plastic packaging will be liable for the plastic packaging tax. That includes those that import goods that are contained in plastic packaging. 

Companies in any of (but not limited to) these sectors could be liable: 

  • Packaging manufacturing 
  • Industrial manufacturing
  • Consumer goods
  • Retail 
  • Pharmaceutical
  • Chemical
  • Food and drinks
  • Cosmetics
  • Oil 

Next steps for businesses? 

If you suspect your business is liable to pay plastic packaging tax then you will need to gather and present data such as pricing, contracts, and details of supply chains.  

You should also assess the fiscal impact on your business, as well as scrutinising and amending contracts with existing suppliers according to who will be liable for any charges incurred. You may want to consider sourcing new packaging that meets the threshold of 30% recycled materials in order to avoid costly tax bill. 

An environmental tax specialist can walk companies through the new taxes and help them to understand any implications for their business.  

Could R&D Offset Plastic Packaging Tax Costs? 

There could however be a ray of hope for business owners in the impacted industries faced with charges, especially those that have undertaken research and development projects in this or the previous financial year.  

The HMRC tax incentive aims to reward companies for innovation and in turn stimulate the economy. The average claim for a small to medium sized business is £53,000, which for many, depending on the plastic packaging use in the business, could go a long way to offsetting additional costs.  

Furthermore, companies that decide to innovate and experiment with the use of new materials to replace plastic packaging could potentially claim for R&D. Similarly, for those creating bespoke IT systems to deal with the new demands of the tax could also benefit from investing R&D implications. An R&D specialist like RDS could advise on this now to help maximise a claim.  

Even companies trying to create or modify their own packaging could be classed as research and development as they attempt to adapt to the new rules. 

To qualify for R&D, the project must relate to your company’s trade and evidence must be provided to show how it: 

  • Looked for an advance in science and technology
  • Had to overcome uncertainty
  • Tried to overcome this uncertainty
  • Could not be easily worked out by a professional in the field

The research and development phase is enough to qualify in most cases.  

Get in touch with us to find out more about how R&D could offset additional business costs as a result of the Plastic Packaging Tax.  

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