The UK's Plastic Packaging Tax

The global plastic pollution crisis has sparked urgent action worldwide, and the UK has taken a significant step forward in addressing this issue through the introduction of the Plastic Packaging Tax in April 2022. Valpak International Account Manager, Aleeza Rai provides an overview of how it's going to date and what's on the horizon.

As suspected, the UK’s Plastic Packaging Tax (PPT) has caused notable shifts in the market. However, recent world events and their associated impact on current market trends, have meant that the effects of the Tax are less clear than anticipated.


Plastic Packaging Tax – an overview

The Plastic Packaging Tax is a levy imposed on plastic packaging that does not meet a minimum threshold of at least 30% recycled content on a per-component basis. The tax was originally set at £200 per tonne for imported or manufactured plastic packaging components. In spring 2023, it was raised to £210 per tonne, and more recently, it was further increased to £217.85 per tonne. These increments in the tax rate were implemented to align with inflationary pressures. Without these increases, the tax rate would effectively decrease due to the high inflation, prompting the adjustments to maintain its impact.

All businesses that manufacture or import more than 10 tonnes of plastic packaging per year are liable for the Tax. HMRC estimated that around 20,000 businesses would be obligated for the Tax; however, only 4,142 companies registered to pay PPT across the 2022 financial year. This initiative aligns with the UK government’s commitment to significantly reduce plastic waste and encourage the use of recycled materials in packaging production, with the added expectation of boosting the growth of the recycling industry.

2022 to 2023 financial year quarterly revenue trends

In the 2022 to 2023 financial year, 4,142 businesses registered for the Tax. Official Government statistics show that just under 1.4 million tonnes of packaging boasted the requisite 30% recycled content, slightly surpassing the reported tonnage of taxable plastic packaging by a mere 4%.

The tax revenue during the initial two quarters of the 2022 to 2023 financial year, stood at a robust £72 million each. This then declined on a downward trend in subsequent quarters to £66 million and £65 million respectively.

Government plans to increase the Tax and promote recycled materials

The government has announced significant amendments to the Plastic Packaging Tax. These changes were enacted through the Autumn Finance Bill 2023. This legislation will alter how the tax is structured and implemented. As such, the taxation policies are expected to affect various stakeholders involved in the production, importation, purchase, and utilisation of plastic packaging within the country.

Who is affected?

Entities involved in manufacturing or importing plastic packaging will experience direct impacts. However, there is an exemption for those dealing with less than 10 tonnes of plastic packaging annually.

Business customers, who obtain plastic packaging from manufacturers or importers, will also likely experience implications as the tax adjustments might influence pricing structures.

Individuals purchasing goods in plastic packaging can also expect to feel the effects, albeit indirectly. However, the impact on overall costs is projected to be minimal, considering that packaging costs typically constitute a small portion of the total expense.

The forthcoming change involves increasing the tax rate in line with the Consumer Price Index (CPI), starting from 1 April 2024. This adjustment is intended to maintain the tax’s real value, as a response to inflation, and support environmental objectives. Additionally, the government is exploring the potential implementation of an escalator system for the tax rate and setting a minimum threshold for recycled plastic content in the future.

Increase in plastic fees

The revised rate of the Plastic Packaging Tax, set at £217.85 per tonne from April 2024, is the proposed amendment to the existing £210.82 per tonne as per the Finance Act 2021.

In terms of economic impact, this measure is not expected to yield significant effects. For businesses, the rate increase is expected to be a one-time cost. However, this one-time cost will vary from business to business.

Valpak support

If your company is affected by the UK Plastic Packaging Tax and you would like to know more about its obligations and how we can support you to meet the Tax requirements, please contact one of our friendly environmental compliance advisors by emailing [email protected] or calling 03450 682 572.