How businesses should prepare for the plastic packaging tax

The plastic packaging tax (PPT) is nearly here. From 1 April, plastic packaging manufactured in or imported into the UK that is less than 30% recycled will be charged at a rate of £200 per tonne.

Many businesses now face significant administrative and financial implications as a result of the tax, designed to encourage the use of recycled content in single-use plastic packaging. These are the three key areas businesses need to focus on to properly prepare and adapt to the new tax.

Talk to international suppliers

The tax will impact UK importers the most, as they will have little control over the sourcing of their packaging and many will have little influence on their suppliers’ environmental policies.

Businesses importing plastic packaging ­– whether it be a finished product or packaging used for containing goods – must start raising the topic of recycled content with their overseas suppliers. Many already have packaging that meets the 30% recycled content threshold in principle.

However, to demonstrate this, they must receive and retain valid evidence from their suppliers to present to HMRC. The evidence will have to be used in the event of a physical inspection by HMRC to confirm the accuracy of self-certifications by the suppliers as to the recycled content of the packaging in question.

The trouble is, this may not be enough. If you consider a UK business that manufactures or imports 10 tonnes of plastic packaging a year will incur £2,000 of PPT, the additional administrative burden of obtaining evidence, conducting supplier audits and maintaining the relevant records could ultimately make the claim for exemption cost-prohibitive.

Review the weight of packaging for individual imported products

HMRC has set out five different methods for confirming the weight of plastic packaging. The method chosen depends on whether the packaging is being imported or produced in the UK. For imports, the sample method – weighing a sample and assigning that weight for future calculations – will suffice.

After carrying out calculations, importers need to retain sufficient records, such as when, how and what sort of calculation was completed. If product specifications provided by the manufacturer or the supplier are used by the business, HMRC will expect a sample test to be conducted and recorded.

Furthermore, if a packaging component specification is altered, a new assessment will need to be conducted by the business and evidence retained. For those who import hundreds of different products, this will create a huge administrative burden.

Only when all the imported products have an assigned plastic packaging weight per component, will the importer be able to accurately determine whether it is liable to register and confirm the amount of tax that will be payable to HMRC.

Embrace sustainability in supply chains

PPT will be a cost for business, but it also represents an opportunity to become more sustainable. For those under the 30% recycled content threshold and falling foul of the tax, and those who do not already have an ESG strategy in place, the PPT could be the catalyst to improve sustainability. It is, after all, one part of the government’s agenda to encourage businesses to behave in a more environmentally-friendly way. Climate change agreements, environmental vehicle regulations and the PPT are all drivers in getting businesses to change.

In short, there is much to do and consider. It’s imperative that those who use plastic packaging start engaging with their suppliers as soon as possible to best position themselves in the year ahead.