Under the umbrella of the Finance Bill 2021, the United Kingdom is set to pass a new sustainable and environmentally friendly plastic packaging tax system that will come into effect on 01 April 2022. The new Plastic Packaging Tax will provide economic incentives for businesses that use recycled plastic when producing plastic packaging.
Here’s our summary of the new Plastic Act
What does the new Plastic Tax entail?
Who will be affected?
The Plastic Tax is likely to impact:
- UK producers of plastic packaging
- Importers of plastic packaging
- (Business) customers of the producers and importers of plastic packaging, and
- Indirectly, consumers who buy goods in plastic packaging in the UK
What are the exemptions?
The tax will not be charged on plastic packaging where (source: https://katten.com/uk-plastic-packaging-tax-a-new-measure-to-reduce-plastic-waste ):
- it has 30 percent or more recycled plastic content;
- it is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight;
- less than 10 tonnes of plastic packaging are manufactured and/or imported by a business annually;
- it is manufactured or imported for use as immediate packaging of human medicines;
- it is in use as transport packaging to import products into the UK; or
- it is exported, filled or unfilled, unless it is in use as transport packaging to export products out of the UK.
What are the penalties for non-compliance?
There will be civil and criminal penalties for failure to comply with the Tax, these include:
- Failure to register for the tax
- Failure to file returns or pay the tax
- Non-compliance can warrant a £500 fixed penalty and a £40 daily penalty accruing each day after the first day on which the business continues not to comply
- There is an appeals process as well as anti-avoidance legislation.
It has been proposed that the Plastic Tax could potentially lead to the increased use of recycled plastic in packaging by 40%. This is equivalent to carbon savings of nearly 200,000 tonnes in 2022/2023. Further, the increase in demand for recycled plastic is expected to incur improved recycling and collections of plastic waste, ultimately helping to reduced UK’s carbon footprint and create a sustainable economy that will benefit the people, planet and economy.
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