By James Fraser, Tax Partner, Armstrong Watson LLP

FROM April 1, 2022, HMRC has introduced a new Plastic Packaging Tax to encourage businesses to use recycled plastics in their packaging. The rate of the tax is £200 per metric tonne of plastic packaging.

The new tax applies to plastic packaging that is less than 30 per cent recycled that is: manufactured in the UK; imported into the UK as packaging only; and imported into the UK as filled packaging such as bottles filled with liquid (the tax will only apply to the plastic packaging itself and not to the goods that it contains).

Any business that manufactures or imports ten or more tonnes of plastic packaging in a 12 month period is required to register for the tax. Businesses manufacturing or importing under this volume will still need to keep records to demonstrate that it is below the tax threshold (and monitor in case the business becomes liable in the future).

Businesses should consider making changes to the packaging it manufactures or imports so that it includes at least 30 per cent recycled plastic where possible. This would mean that no tax would be payable under these circumstances. Plastic packaging is assumed to not meet the recycled content test unless it can be shown that it does.

Actions to take: Maintain records of the packaging the business manufactures or imports, even if this is less than the 10 tonnes a year threshold of the tax; ensure that records held show the relevant information needed to establish how much tax will be payable, or to confirm that nothing is due; provide customers with more information about the types and quantities of material being supplied; consider whether more recycled plastic could be used to reduce the packaging subject to the tax; consider whether to bear the tax cost in the business or pass it on to customers; consider supply chains where the impact of the tax can be mitigated; upskill appropriate staff; register for the online service; and invoices will be required to include a statement that the tax has been paid, however this is not mandatory from April 1, 2022 and will instead come in at a later date.

It is expected that the Plastic Packaging Tax will affect a wide range of businesses, and as a new tax, subject to many conditions, regulations, exceptions and anomalies, will undoubtedly bring many challenges as well as opportunities.

For support or advice regarding your business tax obligations please get in touch with James Fraser on 07793 621979 or email