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Plastic Packaging Tax: Consultation Extension and Overview of Proposal

George Atkinson
May 13, 2020

A few weeks’ ago, the announcements of extensions to the registration and reporting deadlines for 2020 packaging producers in England and Scotland to July in the light of the COVID-19 pandemic came as a welcome move. Shortly after, it was the turn of those with both an interest in plastic packaging and a mounting to-do list in these unprecedented times to receive some helpful news.

The extension of the public consultation period on Government's updated proposals for the Plastic Packaging Tax provides businesses welcome extra time to steady their ships following a turbulent second quarter of 2020, before turning to give Government's updated proposals for the tax greater attention in mid-summer, by which time it is hoped nearer to business-as-usual can be achieved across the packaging industry. With the consultation deadline now extended to August 20th, if you haven't had the time to digest Government's updated proposals, below is a summary of what you'll need to know.

The Basics

The tax, which currently remains on course for introduction in April 2022, is proposed to be levied at a rate of £200 per tonne of plastic material converted into packaging or imported as plastic packaging that does not contain at least 30% recycled content. The tax proposals are being spearheaded by the Treasury and will apply on a UK-wide basis, being outside the realms of the devolved taxation powers held by Wales, Scotland and Northern Ireland.

In a move considered to ensure a broad coverage of packaging that could be considered plastic, the entire weight of packaging that is predominantly plastic by weight will be considered plastic packaging, with the 30% threshold measured against the amount of plastic used on a single, continuous production line to manufacture plastic packaging that is uniform in weight. Although this is likely to mean the threshold will be applied across each individual component of packaging that is predominantly plastic by weight, it is not confirmed.

Government’s proposals on the types of transport packaging to be captured within the scope of the tax see plastic transport packaging used around imports into the UK being exempt from the tax, whereas similar packaging around outgoing exports is proposed to be in scope. Government may wish to reconsider this position on the balance of fairness and the impact such a stance may have on the price competitiveness of UK exports overseas. Where transport packaging is imported as the good itself, this will be subject to the tax just like any other unfilled packaging.

Liability

For UK-based production, the tax will be triggered when raw packaging materials are converted into plastic packaging that does not contain the minimum recycled content required, with those converters liable to pay the tax. Imports of plastic packaging will trigger the tax upon their first movement once they have cleared customs control in the UK, with the consignees on those imports being liable to pay the tax. An amendment from Government’s previous proposals sees the scope of the tax extended to cover imports of filled plastic packaging, alongside their unfilled counterparts.

Any goods under customs control for the entire time they are in the UK and then exported will not trigger the tax to be charged. Similarly, a proposed system of Registered Export Premises (REPs) offers a method for UK-manufactured plastic packaging to pass through to export without triggering the tax.

ith the British Plastics Federation asserting that there is no widely agreed method to confirm the presence of recycled content within an item of plastic packaging once it has been produced, the burden will rest on manufacturers, converters or importers to prove their packaging contains the necessary recycled content; the Treasury suggesting that production specifications, contracts, certificates, purchase orders or sales invoices could be used to obtain such proof from either domestic or overseas supply chains.

Exemptions

Government is proposing narrow exemptions for naturally occurring, ‘cellulose-based’ polymers, as well as packaging coming into direct contact with medicines licensed for use in the UK. Small businesses are also considered, with a de minimis exemption applying to all those converting or importing less than 10 tonnes of plastic packaging in a 12-month period, though Government expects those just under this limit to both continue to reduce the amount of virgin plastic materials they use in packaging, as well as monitor their activities closely to be fully aware of any instance when they become liable to pay the tax. Businesses whose activities exceed the de minimis threshold will have to register with HMRC (either directly or via a producer compliance scheme) and be required to submit quarterly tax returns online, detailing the tonnages of plastic packaging they have manufactured and/or imported, how much tax is due and who is liable to pay. Another exemption of note is that recycled content can be obtained from both pre- and post-consumer waste provided it has been reprocessed, except for scrap and regrind.

Valpak’s Response

As per all policy consultations concerning the resources and waste sector or matters relating to the activities of Valpak and its members, we will be producing a draft response to the updated proposals for the Plastic Packaging Tax. This will be circulated to Valpak members for comments and feedback prior to its submission to HM Treasury in August. We hope to share our draft response with members in the coming weeks.

Get in touch with Valpak if you wish to share your views on the updated proposals for the Plastic Packaging Tax or discuss for the proposals might affect your business.

 

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Disclaimer: The opinions expressed in this weblog represent those of the individual authors and not those of Valpak Limited or any other organisation.