Understanding PPT - Does your business need to comply ?

The key points to consider and how to prepare your business, outlined by our specialists

Plastic Packaging Tax

What is the new legislation?

A brand new tax on plastic packaging has been introduced in the UK with effect from 1 April 2022.

Businesses that have plastic packaging components at any point in their supply chain should be considering PPT. Where a packaging component is used in the containment, protection, handling delivery, or presentation of goods at any stage - it should be considered whether PPT applies.

Who will be liable to pay UK PPT?

Any business; that imports plastic packaging into the UK, imports products contained in plastic packaging into the UK, or manufactures plastic packaging in the UK will be liable to register for PPT and pay any tax due if they exceed the threshold of ten tonnes of plastic packaging in a twelve month period.

Non-compliance for a 12 month period could result in penalties of up to £15,000

The tax will affect a wide range of businesses due to its broad scope. It is anticipated that at least 20,000 businesses will be impacted.

Crucially, registration for PPT will be required even if a business meets the 30% recycled content threshold and does not need to pay any tax.

Impacted businesses, therefore need to aware of and start preparing to meet their compliance obligations.

Some of the main sectors affected include:

Packaging Manufacturing

Industrial Manufacturing

Consumer Goods

Online retail

Cosmetics

Chemical

Pharmaceutical

Food and drinks

*There are exemptions available in certain circumstances.

Plastic Packaging Tax

What tax is payable?

The tax will apply at a rate of £200/tonne on chargeable plastic packaging.

What are the potential risks?

Failure to comply

If a business fails to comply there is a £500 fixed penalty and a £40 daily penalty for the period in which the business does not comply.

Non - compliance for a 12 month period could therefore result in penalties of up to £15,000.

Secondary liability and due diligence requirements:

Even businesses who are not liable for PPT should still carry out adequate checks on suppliers to ensure that PPT is being paid in the supply chain when due.

If HMRC are able to determine that a business either knew or should have know that PPT was not paid, then the business could become liable for the tax.