HM Revenue & Customs has published draft legislation and a policy paper on the ‘Introduction of a new plastic packaging tax’ which will take effect from April 2022.
The tax could have the most impact on the waste and recycling sector since landfill tax was introduced as it brings in indirect taxation, rather than just the PRN system, to boost recycling.
HMRC has issued draft Plastic Packaging Tax legislation (picture: Shutterstock)
Published on 12 November 2020, HMRC explained that “Legislation will be introduced to establish a Plastic Packaging Tax. The government is now publishing a draft of the legislation for technical consultation which sets out the key features of the tax”.
It is anticipated that as a result of the tax there will be a significant increase in the amount of plastic packaging with greater than 30% recycled plastic. The HMRC policy paper states: “Recycled plastic has a carbon footprint that can be up to four times lower than that of virgin plastic. The policy may also help to divert plastics from landfill or incineration, and drive recycling technologies within the UK.”
Key features include:
· the £200 per tonne tax rate for packaging with less than 30% recycled plastic
· there will be an exemption for business which manufacture and/or import less than 10 tonnes of plastic packaging in a 12-month period
· the scope of the tax by definition of the type of taxable product and recycled content
· the exemption for producers and importers of small quantities of plastic packaging
· who will be liable to pay the tax and need to register with HMRC
· how the tax will be collected, recovered and enforced
The tax will not be chargeable on plastic packaging which:
· Has 30% or more recycled plastic content;
· Is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight;
· Is manufactured or imported for use as immediate packaging of licensed human medicines;
· Is in use as transport packaging to import products into the UK; or
· Is exported, filled or unfilled, unless it is in use as transport packaging to export products out of the UK.
Incentive
The Tax has been proposed by the Treasury rather than Defra and HMRC explains that the measure is not expected to have any significant macroeconomic impacts. “The tax will provide a clear economic incentive for businesses to use recycled material in plastic packaging, which will create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.”
Recycled plastic pellets produced by Viridor
There appears to be acceptance by HMRC that the cost of the measure, at least in part, might be passed on to the consumer. HMRC says it “is expected that if all the tax is passed on to individual consumers, the cost to consumers will be small as plastic packaging usually makes up a very small amount of the total cost of goods”.
About 20,000 producers and importers of plastic packaging are estimated to be impacted.
Definition
The draft legislation defines ‘Recycled plastic’ as plastic that has been reprocessed from recovered material by means of a chemical or manufacturing process so that it can be used either for its original purpose or for other purposes.
Thumbs up
Publication of the draft legislation and the April 2022 date is expected to be given a big thumbs up by the UK’s plastics recycling sector which is building a head of steam ahead of the legislation. Major waste companies such as Biffa and Veolia have plastics recycling facilities and Viridor too is developing plants – Viridor is thought to be selling off its recycling assets but the sale is not expected to include plastics recycling, partly because of the tax and its consequential support for the market. Other parts of industry including Jayplas, BPI and Chase Plastics are also expected to welcome the HMRC documents and their significance in confirming the tax will be brought in, in April 2022.
The tax was first announced by the then Chancellor Phillip Hammond in 2018 and was subsequently give a warm welcome by industry.
Related links
- Policy paper and draft legislation.
- A summary of the government’s response to a consultation on the tax.
The post Draft plastic packaging tax legislation published appeared first on letsrecycle.com.
Source: letsrecycle.com Plastic
