Are you ready for the Plastic Packaging Tax in April?

The new regulations were released to modify what is considered to be packaging as well as the different items that will be subjected to the proposed plastic Packaging Tax beginning in April 2023.

HM Revenue & Customs has issued a new set of guidelines on record keeping.

[ Take a look at our plastic Packaging Tax webinar held in March 2022.[]

Starting 1 April 2022, from April 1, 2022, the plastic Packaging Tax applies to manufacturers and importers of plastic packaging that contain less than 30 percent recycled plastic.

Taxes will not be applicable to manufacturers or importers with less than 10 tonnes of plastic packaging each year.

The tax rate would be 200 PS per metric ton of plastic packaging.

The affected individuals will have to keep track of their records and, in the majority of cases, you must register for tax even if the packaging you make or import has more than 30 percent recycled plastic.

These new rules follow a discussion in 2021. They will remove three categories of products from their definitions of package and the addition of a brand new category.

The main legislation governing Plastic Packaging Tax is in Part 2 of the Finance Act 2021

Links that are useful

• Plastic Packaging Taxes – government collection instructions
• Get your business prepared to pay the tax on packaging made of plastic
• Join Plastic Packaging Tax
• If you have to sign up to be eligible for Plastic Packaging Tax
• Packaging that falls within or outside of the scope of the tax on plastic packaging

Do you require registration?

You must register when you’re a company manufacturing or importing more than 10 tons of packaging made from plastic in the course of a year, regardless of whether you have to pay tax.

This includes the importers of business packaging that already has products, for example, plastic bottles that are filled with drinks.

If the package you purchase already contains other items, The tax is only applicable to the plastic packaging.

A registered company will be required to be able to cover Plastic Packaging Tax on any packaging for business that is less than 30 percent recycled plastic.

The tax will be imposed at PS200 per ton.

For instance, if you make 10 tonnes of packaging made from plastic and one tonne has less than 30 percent recycled plastic, then you’ll need to be paid PS200.

The online registration service for customers to sign up and pay for your subscription will be available from April 1, 2022.

The GOV.UK website contains more information on registration to pay Plastic Packaging Tax.

Check out: When you must sign up to be eligible for Plastic Packaging Tax

Group registration

A group of businesses can reduce the administration and payment of tax by selecting the services of a UK-recognized representative of the group to file tax returns and pay on behalf of the companies within the group.

Every company within the group must meet the 10-tonne threshold in order to be eligible to be registered as a group.

Find out how to the option to register an organization group for Plastic Packaging Tax.

Record keeping

A company that produces and imports packaging made of plastic, even if it’s under 10 tons per year, must keep records on the packing materials that are manufactured or imported.

Plastic packaging is believed to not pass the test for recycled content unless evidence can show by evidence.

The requirements for record-keeping are less stringent for a company that manufactures or exports less than 10 tonnes of plastic packaging each year, but certain records are required to be maintained.

If you’re a business that sells recycled plastic, your customers might want more information about the kinds and sizes of plastic you offer to them.

Recycled plastic

The tax is designed to encourage more recycling of plastic.

Businesses are able to begin making modifications to the packaging materials they produce or import to ensure that they contain at minimum 30 percent recycled plastic. This will make sure they’re not subject to tax.

But, records will have to be maintained, and businesses will be required to register for the use of plastic packaging made or imported.

If you’re developing innovative packaging solutions that replace plastic in your company, subsidies could be offered under the R&D Tax Credit program.

Take a look at the Research and Development Tax Credit Knowledge Hub for more details about the tax credit regime.

Maintaining the correct information

The records must be maintained that demonstrate the amount of tax due or to prove that there isn’t any tax due to be paid.

This is a way of keeping records of the amount of recycled plastic that is used in the packaging that is manufactured or imported.

If the plastic is used in packaging, you’ll have to determine if there are all details on the materials that are used to create it. It is best to do this sooner instead of later.