As of 1 April, the UK’s Plastic Packaging Tax (‘PPT’) is in effect. All affected businesses are expected to register with HMRC and begin their first official reporting period. The focus on recycled content in packaging means supply chain transparency is more important than ever, something we at OPM Group are fully committed to.
Whatever your packaging auditing process is, our supply chains are completely traceable enabling you to meet your reporting obligations with confidence. If you are not sure what those obligations are, our detailed FAQs below will walk you through everything you need to know.
What is OPM Group doing about the Plastic Packaging Tax?
At OPM, we have always considered sustainability one of the key pillars of our offering. As such, we were well placed to begin preparing for PPT laws as soon as they were announced in the 2018 Budget.
We have been working with our suppliers and clients to optimise the sustainability of our packaging and labels solutions wherever possible. However, the nature of our flexible packaging and its use in the food industry means that we do still need to use virgin plastic for direct food contact, which is considered taxable.
In line with Government recommendations, any packaging taxes incurred will always be included in our pricing up front, so your costs will be easy to calculate.
We also provide solutions that look at the complete lifecycle of your product to ensure you can fulfil your obligations under the tax without compromising on the quality of the packaging. We source more eco-friendly materials, inks, and varnishes for use in our labelling and flexible packaging, meaning every component we offer is as sustainable as possible.
What is the Plastic Packaging Tax?
The Plastic Packaging Tax is a charge added to the import or manufacture of plastic packaging. It applies to all single-use plastic packaging for consumers as well as packaging used through the supply chain. The levy is charged at a rate of £200 per tonne of taxable packaging. The tax is chargeable per component, so if your packaging is made up of several components – say you are a retailer importing drinks contained in a bottle with a label and a lid – you must account for the cost of the tax on each, and consider where you can incorporate more recycled material.
Who does the tax affect?
The tax affects any business that manufactures or imports 10 or more tonnes of finished plastic packaging within a 12-month period. This includes OPM Group, as well as any packaging manufacturer, food producer, transporter, retailer, or other company from any sector that uses plastic packaging.
The tax also applies if you expect to import or manufacture at least 10 tonnes of finished plastic packaging in the following 30 days at any point after 1 April 2022. You must register for the tax within 30 days of the first date that this condition is met.
Are there any exemptions?
Yes. Depending on the type of plastic used and the application it is used for, some of your plastic packaging components may be untaxed and some may be exempt from PPT entirely. The exemptions mostly depend on how the plastic is due to be used.
Exemptions
The following applications are exempt from PPT entirely. This means they do not count towards the 10-tonne threshold and do not need to be included on your returns.
- Blank labels
- Backing liners – however, the material supplier is liable for taxation unless is contains 30% or more recycled content
- Mixed materials (such as multi-ply constructions or laminates) where the predominant component material is NOT plastic (materials where the predominant material is plastic are subject to the tax unless the plastic content is at least 30% recycled)
- Use as transport packaging to import other goods into the UK
- Packaging manufactured or imported for non-commercial purposes
- Packaging integral to the product
- Items where the packaging element is secondary to a storage function
- Products designed to be re-used for the presentation of goods
- Used in aircraft, ship, and rail goods stores
- Exports
The following applications are not taxed, but they do still count towards your 10-tonne threshold and must be included in your returns.
- If the pack is made of 30% or more recycled content
- Used for the immediate packaging of licensed human medicine
- Permanently recorded as set aside for non-packaging use
What if we only use plastic with more than 30% recycled content?
While you do not owe any tax liability for this packaging, you must still register under the scheme and include it in your quarterly returns along with evidence that proves the claimed recycled content is accurate.
What steps does my business need to take?
Businesses should quickly assess whether their packaging meets the 10-tonne threshold and how much of it affects their PPT liability if they have not done so already. They must register with HMRC within 30 days of 1 April.
It is hugely important that companies carry out due diligence checks on their entire supply chain to make sure compliance is met at all levels. Partnering with a transparent packaging supplier that has a stable supply chain such as OPM Group will make this much easier.
What are my reporting obligations?
Any business that is subject to the tax must submit a quarterly return breaking down chargeable and non-chargeable plastic components they have imported, exported, or manufactured. This includes any plastics which are exempt for any of the reasons listed above.
What happens to businesses that don’t comply?
The HMRC website advises there is a £500 fixed penalty for the first instance where a company fails to register, file returns, or pay their liability. For every subsequent day that compliance is not met, there will be a further £40 penalty. There are also anti-avoidance and anti-fragmentation measures. This should be taken as a sign that HMRC will take enforcing the tax seriously.
How can we cope with the cost of this tax?
While the tax is, in the long term, a positive step towards a sustainable, circular economy, there is no question it arrives at a difficult time for many businesses. Some short-term difficulties are therefore unavoidable.
The intention of the tax is to persuade companies to use more recycled content in their packaging, or to embrace innovations that reduce the amount of plastic or packaging used throughout the supply chain.
At OPM, we have spent years focusing on sustainability across our range of labels, films, and flexible packaging. This means we can help keep your tax liability as low as possible through this challenging rollout of PPT. Talk to us today to see how we can support your business.
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