What is the UK plastic tax (PPT) and will it affect my business?

Plastic and box board fruit packaging - Dairi-Pak

More than 1.5m tonnes of plastic packaging used in consumer products in the UK each year are mostly made from virgin rather than recycled plastic. Plastic packaging accounted for 44% of plastic used in 2017 in the UK and 67% of the plastic waste produced (2.26M tonnes) (Source: Veolia White Paper).  This tax is designed to encourage the use of recycled material within plastic packaging. 

If you manufacture or import more than 10 tonnes of plastic packaging within your business per year, you will be affected by the new UK plastic tax, being introduced in April 2022.

If you consume plastic packaging but are buying from a UK manufacturer, they will cover the tax liability, but you may be affected by the on costs of this or the possible effects on material availability.   You need to ensure that your suppliers are meeting their liabilities in order to demonstrate due diligence. 

Exported primary and secondary packaging will be relieved.  Imported transport/tertiary packaging is also exempt (source: Valpak).

What defines plastic packaging?

For the purposes of the tax, plastic packaging is defined as packaging which is predominantly plastic by weight.

The tax will apply to plastic packaging which does not contain at least 30% recycled material.

The theory behind the tax is that it will provide a monetary incentive for businesses to increase the use of recycled plastics.  This is in turn will create greater demand for the return of waste plastics into the circular economy rather than seeing it go to landfill or for incineration. 

What will the rate be for PPT?

The rate of PPT will be £200 per metric tonne of plastic packaging (that contains less than 30% of post-consumer recycled plastic content) (source: Packaging Europe).

Who pays PPT?

The tax will be levied on importers and manufacturers, but businesses should bear in mind that the liability for non-payment of PPT can be placed with other stakeholders within the supply chain if a business knows or suspects that PPT has not been accounted for.  Your business should take reasonable steps to verify PPT has been paid and guidance on what constitutes due diligence in this area is expected.

What will the economic impact of the Plastic Tax be?

The Government expects there to be no significant economic impact, however, some organisations may choose not to act and just pass on the additional costs to their customers.  There will also be an added level of complexity and administration affecting most businesses’ supply chains (at some point within the chain).  This is bound to incur costs that need to be ‘mopped up’. 

There’s also the question of whether the supply chain is ready for the increased demand.  The recycling infrastructure in the UK is likely to lag behind demand for post-consumer waste from the packaging manufacturers.  The limited UK supply base coupled with an increase in demand for plastics with >30% recycled content will likely push prices up to a point where the benefit is removed.  Whether this happens will also depend on the price of oil.  Low oil prices can mean it can be cheaper to buy virgin material than material with a recycled content. 

Of course, not all applications can utilise plastics with recycled content, whether that’s for hygiene reasons (licensed human medicines are exempt) or for material performance reasons. 

Does fibre-based packaging hold the answer?

Whilst this tax may be lauded in its attempts to encourage recycling, ultimately, the problem needs addressing with less plastic packaging being produced in the first place.  Whilst we are obviously pro fibre-based packaging as cardboard packaging manufacturer, we do also readily concede that plastics have their place (especially in reducing food waste by pro longing food freshness).  We however are pleased to work with our customers to reduce their use of plastics where appropriate.

For example: helping customers replace plastic jerry cans with cardboard boxes to pair with bag in box solutions (the use of 1 truck of 10L Bag-in-Box is equal to 12 trucks of 1L PET bottles – source: Packaging Connections).

If you think there’s scope to utilise more paper-based packaging in your supply chain, please do not hesitate to get in touch to discuss your requirements.  Our friendly team would be pleased to advise (Email: sales@dairi-pak.co.uk or call 01939260342)

N.B: further guidance is being realised throughout 2021 which may affect a business’ liability under the scheme.

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