The new tax, which takes effect on 1 April 2022, is designed to encourage companies to use recycled, rather than new, plastic in packaging.
According to new UK government guidance, the tax applies to plastic packaging manufactured in, or imported into, the UK. The tax is effective when less than 30% recycled plastic is used to manufacture the packaging. In such cases, the tax rate is £200 per metric ton of plastic packaging.
As the guidance points out, the proposed legislation is not yet law, and is thus subject to change.
Any business that manufactures or imports 10 or more tons of plastic packaging over a 12 month period must register for the new tax. Businesses that meet the criterion must register even if they do not meet the threshold to pay the tax.
Companies will be able to register online from the date that the tax becomes effective.
There are certain specified cases where the Plastic Packaging Tax does not apply. These include plastic packaging used for medicinal products, and other specialised components.
Moreover, certain plastic packaging components are exempt from the tax.
As the law is subject to change, businesses should consult a tax expert if they require certainty about their potential obligations.
The UK government urges all businesses that produce or import plastic packaging to keep effective records to establish precisely how much tax they need to pay - or to demonstrate that they do not need to pay the Plastic Packaging Tax.
In preparation for the Plastic Packaging Tax, businesses should ensure they have all relevant information about the materials used in their manufacturing process.