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New measures to curb use of packaging, plastics and single-use items

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Townsend Matthew
Matthew Townsend

Partner

London

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Image of Danae Wheeler
Danae Wheeler

Associate

London

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10 December 2021

The Waste Prevention Programme for England (WPP) sets out England’s approach to improving resource efficiency across seven key sectors. It seeks to reduce the number of products becoming waste, and, in turn, ensure that more products can be reused, repaired, and remanufactured. The seven sectors covered by the WPP comprise: construction; textiles; furniture; electrical and electronics products; road vehicles; packaging, plastics and single-use items; and food. These sectors are considered the most relevant in terms of tonnages of waste arising, carbon emissions from production, and public interest. 

We take a closer look at the packaging, plastics and single-use items sector. 

One of the WPP’s aims is to encourage a move away from hard to recycle and single-use products. To support this, the UK Government is:

  • launching a 12-week consultation on new policy proposals to ban single-use plastic items to take effect from April 2023 and introducing mandatory labelling on packaging to help consumers dispose of these items correctly; 
  • encouraging industry to take action. Members of the UK Plastics Pact, a voluntary initiative aimed at creating a circular economy for plastics, signed up to a set of 2025 targets. These are aimed at eliminating problematic or unnecessary single-use packaging, making 100% of plastic packaging reusable, recyclable or compostable; ensuring 70% is recycled or composted; and achieving a 30% recycled content in plastic packaging; and
  • proposing specific measures on the use of single-use plastics, now set out in the recently enacted Environment Act. These include:
    • the introduction of a Deposit Return Scheme for single use drinks containers;
    • the Extended Producer Responsibility schemes, making packaging producers responsible for the cost of recycling and disposing of their packaging; and
    • the introduction of a plastic packaging tax (PPT) from 1 April 2022, which imposes a tax of GBP200 a tonne on plastic packaging produced in, or imported into, the UK for plastic packaging that contains less than 30% recycled plastic. 

Of these measures, the PPT is expected to affect the operations of up to 20,000 producers and importers of plastic packaging. The PPT will apply to UK and overseas-based organisations and be levied on plastic packaging components when they are finished. A component is finished when it has undergone its last substantial modification. For example, importers of drinks in plastic bottles will be liable for any PPT due on those bottles. Packaging that is made of multiple materials but contains more plastic by weight than any other substance will be regarded as plastic packaging for the purposes of the tax. 

For UK manufacturers, the tax will apply at the manufacturing stage. If a company imports a finished plastic packaging component into the UK (including importing packaging that already contains goods), the importing business is liable for the tax. This is intended to stimulate demand for recycled plastic.

Exporters can defer payment of the tax for up to 12 months from the point of manufacture or importation and will not have to pay the tax if the goods are exported within that 12-month period.

If the packaging plastic manufactured or imported contains at least 30% recycled plastic, companies will not need to pay the tax but may still need to register with HMRC. Registration, which opens on 1 April 2022, is required for organisations that manufactured or imported 10 tonnes or more of finished plastic packaging components within the last 12 months, or plan to do so in the next 30 days.

Companies that do not need to register, because they meet this de-minimis threshold, are advised to keep records to show that they manufacture or import less than 10 tonnes per year of finished plastic packaging, including filled packaging. This is because under the PPT, HMRC can impose liability on any business in the packaging supply chain where that business knows “or ought to know” that the producer or importer has not paid their PPT.

There are, however, certain tax exemptions. These include:

  • when the plastic packaging is an integral part of the good (for example, inhalers and toner cartridges);
  • where the packaging is designed to be used (sales display shelf);
  • packaging used in the delivery of goods to secure the safe transit of products (pallet wrap); and
  • packaging for medicinal products, among other listed exemptions. 

The PPT and these wider measures will require companies to review their supply chains to assess their dependence on non-recyclable plastics and examine the scope for recycling. Developing processes and controls to record the data will help businesses to manage compliance, contracts and pricing.

The Government has deferred (post April 2022) the requirement that importers and manufacturers of plastic packaging provide a statement with their invoices to confirm that tax has been paid. Nevertheless, companies  responsible for accounting for the tax are encouraged to make the paid PPT visible to their business customers in the interim.

Considerable change is underway to reform the packaging, plastics and single-use items sector and we expect further measures to encourage the use of recyclable materials.