Unpacking the Plastic Packaging Tax – what your business needs to know

At New Vision, one of the things we love most about operating in the packaging sector is the speed of change.

Whether it’s design trends, next-gen technology and materials or finding new ways to cut through noise, the industry doesn’t stay still for long. When we talk about innovation to be proud of, you’ll find plenty across our diverse market.

Of course, this evolving business environment also means that regulations and legislations change with them. With changing ‘regs and legs’ on the horizon, high on the agenda for brand owners operating in the UK is the incoming Plastic Packaging Tax, which is set to come into force from April 2022.

We pride ourselves on understanding the market better than anyone, and using that knowledge to support our customers, partners and peers. Below, we share a rounded overview of the new tax initiative, why it’s being introduced, and what it means for UK businesses.

What is the Plastic Packaging Tax?

A new reform introduced by the UK Government, the Plastic Packaging Tax (PPT) is an environmental tax designed to encourage greater use of recycled materials in packaging manufacturing. The tax was first revealed as part of Budget 2018 announcements.

Under the new legislation, brand owners that manufacture packaging in the UK or import to the UK from elsewhere will be charged tax on packaging that contains less than 30% recycled material, at a rate of £200 per tonne of packaging.

Why is the Plastic Packaging Tax being introduced?

There’s no doubt that sustainability is staying front and centre of public awareness. One of the major hurdles is the problem of plastic waste – plastic that is used by the consumer, sent to landfill and takes many years to break down. This one-way journey is known as a linear waste stream.

The goal for many businesses is to create a circular waste stream, which makes better use of recycled material and reduces the environmental burden of plastic. Packaging is, of course, central to this conversation.

The idea is to discourage the use of virgin plastics within the packaging supply chain, and as a result, reduce the volume of plastics sent to landfill and incinerators, or left to litter the land and oceans. In addition, it is thought that the carbon footprint of recycled plastic can be up to four times lower than that of newly manufactured virgin plastic.

Since packaging containing more than 30% recycled material is exempt from the tax, there is huge financial incentive for businesses to use more sustainable material in their packaging.

What will change for my business?

Every business that manufactures or imports 10 tonnes of packaging or more, in the UK, is required to register for the tax with HMRC. The tax will be accounted for in quarterly tax returns, beginning July 2022. Monies raised through the Plastic Packaging Tax is not ringfenced for waste management purposes and will simply return to central government funds.

The key for brands will be the collection, collation and reporting of data, including:

• Evidence of packaging tonnage and recyclate content
• Proof of exemption
• Who will be liable to pay the tax
• Date of production or import
• Assessment of data reliability

Importantly, records must be preserved for a minimum of six years following each accounting period.

At first glance, a charge of £200 per tonne may seem like a relatively small amount, but the sheer scale of costs, taking into account the extremely high quantities of packaging produced in today’s volume-led market, could be enormous.

For many businesses, the Plastic Packaging Tax could present an unwelcome surprise in costs. The tax, in combination with the expected rise of recyclate prices – and potential shortfalls in availability – mean that a full packaging audit may be on the cards.

Is your business armed and ready for the new Plastic Packaging Tax?

Enter New Vision Packaging, a team of experienced packaging pros with a genuine passion for what they do!

Ready to put us to the test? Get in touch to arrange a comprehensive no-obligation ‘Packaging MOT’, which audits and analyses aesthetics, dimensions and materials of existing packaging to suggest smaller tweaks, changes and cost-saving elements that can make a big difference!

Packaging that creates love at first sight

No matter the industry, we believe that a true leader sets the benchmark and continues to raise it. As a packaging design and supply innovator, New Vision proudly leads the way when it comes to packaging sustainability, quality design and security of supply. A huge part of our everyday lives, packaging is often an ‘unsung hero’ – but New Vision puts it centre stage.

We understand the challenges faced by our brand customers today when it comes to packaging, and what makes all the difference is that we care. Our friendly and experienced team offers a range of bespoke packaging services that run the full gamut of the supply chain, from design, audit and management, through to contract packaging and sourcing.

Alongside premium carton board materials that avoid Plastic Packaging Tax liability, New Vision offers innovative plastic polymer substrates, such as recyclable BIO-PET lidding film, a high-performance material derived from renewable sources – helping to close the packaging loop without compromising on quality or barrier characteristics.