The UK Plastic Packaging Tax (PPT) - are you ready?

Coming to a farm near you –The UK Plastic Packaging Tax (PPT) - are you ready?

This April the Plastic Packaging Tax (PPT) will be introduced, with the aim of promoting increased levels of recycling and collection of plastic waste to support higher demand for recycled plastic. This will divert it away from landfill or incineration and support the transition to more sustainable consumption.

Many agriculture, food and farming enterprises will be affected, so it is important to understand how the tax could affect businesses, what it could cost and how to prepare for it.

What is the Plastic Packaging Tax (PPT)?

The tax will apply to plastic packaging designed for use in the supply chain and single use consumer packaging. Packaging covered by the tax includes products which enable goods to be contained, protected, handled, presented and delivered. For example: shrink wrap, plastic labels, reusable plastic crates and FIBC bulk bags.

For the purposes of the PPT, plastic means a polymer material to which additives or substances may have been added. If a plastic packaging component is made from multiple materials but contains more plastic by weight (including additives which form part of the plastic) than any other substance, it will be classed as a plastic packaging component for the purposes of the tax.

PPT will also apply to polymers which are biodegradable, compostable and oxo-degradable, meaning ‘greener’ packaging will not automatically be exempt. However, it will not apply to any plastic packaging which contains at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight.

It will be applied to plastic packaging entering the UK market whether manufactured in, or imported into, the UK.

Who will be affected by the Plastic Packaging Tax?

UK plastic packaging manufacturers, importers, business customers of manufacturers and importers, and consumers who

buy plastic packaging or goods in plastic packaging in the UK will all be affected.

The Plastic Packaging Tax will be felt in many sectors of the UK economy. The tax has been set a rate of £200 per metric tonne on plastic packaging placed onto the UK market which contains less than 30% recycled plastic content.

There will be an exemption for manufacturers and importers of less than 10 tonnes of plastic packaging per year.

There are a limited number of plastic products which meet the definition of plastic packaging but are excluded from the tax. They include products which are designed to be used for long-term storage, are an integral part of the goods (this does not apply to ready meal trays) or are reused for the presentation of goods.

The taxable business is the one that completes the ‘last substantial modification’ to the plastic packaging component. If the last substantial modification is made at the point where empty packaging is filled with product, then it will be the last substantial modification prior to this.

Due diligence will need to be carried out at the tax point. If a business buying plastic packaging components believes the tax should have been paid by a supplier and it is not clearly shown on invoices, that business may be subject to secondary liability.

So, make sure the Plastic Packaging Tax is itemised on invoices from suppliers where they have made the ‘last substantial change’.

Taxable businesses will be expected to hold detailed information on packaging components which will likely include total weight of plastic packaging, weight of plastic packaging incorporating at least 30% recycled plastics and formulas for plastic packaging to evidence which components are subject to taxation. Businesses may also be expected to carry out due diligence on their supply chains to increase transparency in the production of plastic packaging material and ensure tax calculations submitted to HMRC are accurate.

Advice on preparing for the Plastic Packaging Tax:

Managing the tax liability on plastic packaging is key to supporting your profitability. As farmers you are quite often the start of the food chain, so passing this cost on will be challenging.

Review your packaging and measure your usage of packaging components which meet the criteria for taxation.

Start talking with your supply chain, customers and tax advisors, and begin collaborating ASAP to make sure you can all meet your due diligence requirements and control your tax liability.

The new tax may be the prompt your business needs to switch to more environmentally friendly materials helping your ESG strategy.

How can we help?

NNZ/LBK have been readying to help you mitigate the impact of the PPT. As a packaging network we focus on sourcing the right solutions for your business. We search high and wide to solve some of your biggest packaging challenges. One solution we are excited to share with you is the development of our rPET FIBC bulk bags.

FIBC’s are traditionally made using virgin PP (Polypropylene) and will be affected by the PPT. With this in mind we have been working with our suppliers on some solutions.

Our rPET FIBC’s will help you meet the recycled content requirements of the PPT. They offer the sustainable alternative to virgin PP FIBC’s and are certified, made from 96% recycled PET, are recyclable. They originate from a fully certified production facility with EFSA (European Food Safety Authority) approval in progress. They also help boost the circular economy by increasing the recycled content of material in circulation. There are different sizes of FIBC’s in stock for you to trial.