Taxing Plastic Packaging

The growing mountain of plastic waste and its terrible impact on our environment has been in the limelight for a while, especially after China banned imports of plastics in January 2018.

In May 2018 the EU Commission tabled a proposal to introduce a plastics tax at 80 Euro Cents per kilogram of non-recycled plastic (and thereby to generate an extra EUR 6.6 billion per year for the EU's budget, which is weakened by the departure of the UK). The plastics tax was to be imposed on the Member States.

By contrast, the new "Plastic Packaging Tax" the UK Government plans to introduce in April 2022 is to be paid by businesses who manufacture or import plastic packaging in the UK, including​ imported filled packaging.

The tax, first announced by the UK government in 2018, is aimed at introducing "a new world-leading tax" on the UK production and import of plastic packaging with less than 30% recycled content. The tax wants to incentivise the production of more sustainable plastic packaging and increase the use of recycled plastic.

The tax is planned to be charged at £200 per tonne.  A de minimis threshold of 10 tonnes is aimed to prevent excessive administrative burdens being​ placed on the smallest businesses.

For imported plastic packaging, the UK government wants to impose the tax on the person "on whose behalf the plastic packaging is first commercially exploited in the UK" (i.e. transported, stored, etc.), excluding imports for personal or non-business use by the first customer in the UK. A joint and several liability, for example of overseas companies and their fulfilment house operators, is also discussed.

Currently, the UK government is consulting with stakeholders on the detailed design and implementation of the tax (e.g. regarding types of plastics in scope, taxable person in supply chains, exemptions, invoicing, tax registration), although a significant number of specifics seem to be hammered out already.  

The UK government plans to publish primary legislation in Finance Bill 2020-21, followed by draft secondary legislation and guidance. 

It will be important for the plastics industry to follow this new legislative initiative as closely as possible. It might - depending on the individual circumstances of a business, its products and the conditions of its supplies - introduce a new cost factor and compliance burden to them which needs to be mitigated. We recommend drawing up new contracts regarding plastic packaging carefully and rethinking established supply conditions.