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Plastic Packaging Tax: How you’re affected and how we can help

Claire Scott provides an overview of the UK’s new Plastic Packaging Tax, who it affects, and why it’s an opportunity for businesses to boost competitive advantage and reduce their carbon footprint.


On 1 April 2022, a new Plastic Packaging Tax will be introduced that will affect tens of thousands of businesses – not only those that manufacture plastic packaging, but also those who import goods in plastic packaging as well.

Plastic is a highly versatile packaging material, but far too much is being used unsustainably and thrown away, often ending up in the natural environment. According to some experts, we are currently on track for there to be more plastic in the oceans than fish by 2050.

Switching to recycled plastic is one of the solutions on the table. The more recycled plastic we use, the less virgin (new) plastic needs to be produced from unsustainable sources like fossil fuels and entered into circulation, meaning less waste overall and fewer carbon emissions.

This is what the new Plastic Packaging Tax hopes to achieve. Below is a brief summary (for the full details visit the guidance published on gov.uk), after which I’ll explain how we can help you use eco design and recycled packaging as a valuable sales opportunity.

 

What is it?

The Plastic Packaging Tax (PPT) is a new regulatory measure that applies to most types of plastic packaging manufactured in, or imported (whether filled or unfilled) into, the UK. Eligible packaging which contains less than 30% recycled plastic will be taxed at a rate of £200 per tonne.

It will take effect from 1 April 2022 and liable businesses will file tax returns on a quarterly basis, much like VAT.

The main objectives of the PPT are to:

1. Incentivise businesses to use recycled plastic in packaging rather than virgin plastic

2. Create a greater demand for these recycled plastics in the UK, and in turn;

3. Stimulate more collection and recycling of plastic waste, diverting it away from landfill or incineration.

The government hopes the measure will increase the use of recycled plastic in packaging by around 40%. This is equivalent to carbon savings of nearly 200,000 tonnes in 2022-23.

 

Which types of plastic packaging will be taxed?

The PPT covers plastic packaging components (including biodegradable and compostable plastics) across two broad areas:

1. Packaging designed as suitable for use in the supply chain

This covers packaging designed to either contain, protect, handle, present or deliver goods from manufacturers to end customers. Examples include plastic trays, crates and containers, shrink and pallet wrapping, protective film, labels, coat hangers, and food wrappers.

2. Packaging designed for single use by the consumer

This is packaging designed to be used once by the consumer and then disposed of, such as plastic bags, disposable cups, gift wrapping, and single use food pouches.

Plastic packaging fitting either of these two categories will be taxable unless it contains at least 30% recycled plastic or meets a small number of specific exemptions.

Exclusions and exemptions

There are some types of plastic packaging excluded from the tax. These include:

  • Where the primary function is long-term storage, such as toolboxes or CD cases
  • Where the packaging is an integral part of the goods, such as printer or water filter cartridges
  • Where the primary function is to be reused for the presentation of goods, such as displays and shop fittings.

In addition, there are also some exemptions for very specific uses of plastic packaging, including:

  • Packaging for human medicinal products
  • Packaging permanently set aside for ‘non-packaging use’
  • Packaging used specifically for transporting imported goods or storing goods on international journeys.

 

How does it affect you?

Most businesses who manufacture, import or purchase plastic packaging (or goods in plastic packaging) in some form are likely to be affected, whether directly or indirectly.

Manufacturers of plastic packaging

You need to register for the PPT if you’ve manufactured 10 or more tonnes of ‘finished’ plastic packaging components within the last 12 months, or will do so in the next 30 days.

‘Finished’ means plastic packaging components that have undergone their last ‘substantial modification’, or in other words, the last manufacturing process that changes the nature (shape, structure, thickness or weight) of the packaging. This includes processes such as:

  • Extrusion
  • Moulding
  • Layering and laminating
  • Forming
  • Printing

Packing and filling, labelling, cutting and sealing are not classified as substantial modifications. It is the business that undertakes the last substantial modification who is liable for the tax (if you think your customer or supplier performs the last substantial modification, you need to check with them to prove you’re not liable).

Manufacturers subject to the tax must keep records of the weight of plastic packaging produced and the percentage of recycled content (if 30% or more). Plastic from ‘scrap and regrind’ processes within a production facility does not currently count as recycled material (although the packaging industry is seeking clarity on this at the time of writing).

Where a packaging component is made of multiple materials, the entire component (and therefore its entire weight) is considered ‘plastic packaging’ if it contains more plastic by weight than any other substance.

Importers of plastic packaging or goods in plastic packaging

You also need to register for the PPT if you’ve imported 10 or more tonnes of finished plastic packaging components into the UK within the last 12 months, or will do so in the next 30 days. This applies no matter whether the packaging is filled or unfilled.

Like manufacturers, importers must also keep records of the weight of plastic packaging they import and the percentage of recycled plastic content.

Buyers of plastic packaging

If you purchase finished packaging from another business within the UK, you don’t have to register for the PPT. However, you still need to complete due diligence to make sure your supplier has accounted for the tax or provided proof that the packaging is exempt. If you don’t, you could be held jointly liable for any unpaid tax.

It’s also worth considering that packaging suppliers may pass costs relating to the PPT onto you.

                                                                  

How we can help you turn this into an opportunity?

The PPT is just the start of a looming wave of regulatory action on the way for plastic packaging, but that’s not the only reason to start taking action yourself. It’s also an opportunity to build a more competitive and profitable business.

Carbon savings

Being able to demonstrate the use of recycled packaging material has a clear brand value benefit. Packaging is one of the most outwardly visible aspects of a product’s or company’s environmental performance, and the majority of British consumers consider packaging waste a major issue.

As recycled plastic generally requires much less energy to produce over its lifecycle, there is also a carbon footprint benefit. According to research from Manchester-based Axion Polymers, some types of recycled plastic can have up to 90 per cent lower ‘embodied carbon’ than their virgin counterparts.

This can have a potentially huge impact on the Scope 3 part of your carbon footprint, which is becoming an important focus area for many large customers.

A quick-fire guide to Scope 3 carbon footprints

Lowering the embodied carbon in your packaging can be a tricky task; switching one material for a ‘greener’ alternative can sometimes have unintended negative consequences. Speak to us about how we can help. 

 

Designing out waste

Unfortunately, we cannot recycle our way out of the problem of plastic pollution. Recycling is important, but these are ‘end of pipe’ solutions – some of the most effective solutions are actually further back in the manufacturing and design process. 

Examples of this include:

  • Process efficiency: With our support, Romix Foods in Wigan reduced its annual use of plastic packaging by 14 tonnes by installing a new sachet filling line that dispenses product more accurately, allowing it to move to smaller sachets
  • Packaging eco design: Many drinks manufacturers have removed plastic ring holders and shrink wrapping from multi-pack cans by replacing them with cardboard toppers. Some have even removed packaging for multipacks altogether by bonding cans together with recyclable glue
  • Product eco design: Samsung eliminated the need to package its phone chargers in protective film by changing their form from a glossy to a matte finish. Similarly, Lush Cosmetics eliminated the need for plastic bottles, containers and tubes for many of its products by changing the form of shampoos and soaps from a liquid into a solid.

Some of the simplest changes can be the most cost effective. For example, I’ve worked with businesses who have cut out significant amounts of plastic transit packaging just by switching from pallet wrapping to recycled strapping, or by replacing protective packaging with reusable blanket wraps.

To explore your options for eco design and packaging reduction, get in touch with one of our specialist advisors for a product and packaging review.

 

Start the conversation

Hopefully what the above shows is that there are often far more options for acting on packaging than businesses assume, so it’s worth using the Plastic Packaging Tax as an opportunity to start a conversation now with customers and suppliers about recycled content, packaging reduction and eco design.

If you’re an SME manufacturer in Greater Manchester, we can provide fully funded advice on how to capitalise on these opportunities, as well as how to tie packaging reduction into your wider net zero ambitions.

For more information, make an enquiry today.  

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Claire Scott

Claire Scott, Environmental Business Advisor

Claire has more than 20 years' experience in providing environmental advice, guidance and regulatory support to businesses, specialising in resource efficiency and sustainability. Claire has a degree in Environmental Science, is an ESOS Lead Assessor, a member of the Chartered Institution of Wastes Management (MCIWM), a practitioner member of the Institute of Environmental Management & Assessment (PIEMA), a Chartered Environmentalist (CEnv) and an IEMA registered environmental auditor.

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