SBS21: Plastic Packaging Tax: How will it be received by businesses and consumers?

Squire Patton Boggs

This blog post has been produced for the Greater Birmingham and Coventry and Warwickshire Chambers of Commerce as part of the 2021 Sustainable Business Series: Net Zero campaign.

The Sustainable Business Series: Net Zero is the Chamber’s first campaign on environmental sustainability, which aims to share best practice, guidance and knowledge to increase business progress to net zero. In 2021, this involves 5 free online webinars taking place from the end of September and throughout October along with publishing thought leadership podcasts, videos and blog content. The campaign will feature a Sustainability Summit on 3rd November

Thanks to our Headline Sponsors – Aston University, Arup, Morgan Sindall and the University of Birmingham - all webinars and the Summit are free to attend. Interested parties can find out more about eh Sustainable Business Series: Net Zero here.

The plastic packaging tax (“the tax”) will take effect on 1 April 2022, with UK businesses which produce or import plastic packaging components (“PPC”) in quantities of 10 or more tonnes per year affected. 

It is likely to receive a mixed reception. Whilst most would support the Government’s aim of increasing the use of recycled content in PPC, the tax comes at a time when 92% of manufacturers and 90% of importers are reporting increased costs[1]. With the introduction of the tax, those businesses that have not already passed these increased costs on to customers will likely do so, meaning that the tax may unintentionally add to the cost of living in the UK. This is compounded when one considers that the tax will take effect on the same day as the controversial increase in national insurance contributions.

To manage increased costs and to ensure compliance with the law, businesses should pay close attention to the rules of the tax and prepare for compliance now.

What is the tax and who will it apply to?

The tax will apply to ‘finished’ PPC which is produced for commercial purposes in the UK, or imported into the UK, where the total amount of plastic within contains less than 30% recycled plastic by weight. Where the plastic packaging is produced in the UK, the producer is liable to pay. Where the plastic packaging is imported, the person on whose behalf it is imported is liable. Tax will be charged at £200 per metric tonne of chargeable PPCs of a single specification, or for part of a tonne, the proportionately reduced amount.

Certain PPCs will not come within the scope of the tax:

  • transport/tertiary packaging and transport containers for delivery of goods into the UK;
  • components for use in the immediate packaging of a medicinal product;
  • components permanently designated or set aside for use other than in the containment, protection, handling, delivery or presentation of goods;
  • where the packaging function is secondary to a storage function;
  • where the packaging is an integral part of the goods;
  • where the packaging is designed primarily to be reused for the presentation of goods

Tax liability may also be deferred if the PPC is intended to be exported from the UK.

How to comply and the consequences of non-compliance

Businesses will be required to self-assess whether they are liable to pay the tax and keep records of this for audit purposes. Liable businesses will then be required to register with HMRC, submit quarterly tax returns via an online platform, and make a quarterly electronic payment.

Evading the tax or misrepresenting, by false documents or statements, so as to deceive as to tax liability will be criminal offences. The penalty if convicted is a maximum of 12 months’ imprisonment (for evasion), or 6 months’ imprisonment (for misstatement), or a maximum fine of £20,000 or (if greater) three times the total of the amounts of tax that was, or was intended to be, evaded.

Penalties may also be issued for non-compliance – either a fixed £500 penalty, or a daily penalty of £40 for each day of non-compliance.

by Anita Lloyd (Director) and Oliver Bristow (Associate) - Squire Patton Boggs

Rising costs force UK businesses to ponder price increases | ICAEW

Further information for businesses - GOV.UK (