The government is set to introduce its so-called ‘Plastic Packaging Tax’ in 2022. Here, we take a look at the new tax and consider how it could affect certain businesses.

Outlining the tax
The government wishes to encourage the ‘responsible use of plastic’ amongst UK manufacturers.

Introduced in the 2018 Spring Statement, the Plastic Packaging Tax will affect plastic packaging containing less than 30% recycled material. In March 2018, the government launched a call for evidence on the matter, which received a record 162,000 responses – highlighting ‘strong public interest in action’ on the matter. As a result, the government later consulted on the design of the Plastic Packaging Tax, and how best to implement it without causing ‘administrative disruption’.

The government found that using recycled plastic is often more expensive than using new plastic, despite it being better for the environment. Plastic packaging accounts for 44% of all the plastic used in Britain, and the UK generates more than two million tonnes of plastic packaging each year. According to the government, the Plastic Packaging Tax will be set at a rate that provides a ‘clear economic incentive’ for businesses to use recycled material in the production of plastic packaging. The government hopes that this, in turn, will create greater demand for this material, and ‘stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration’.

The government intends to set out its next steps in relation to the Plastic Packaging Tax at the 2019 Budget.

Considering its effects on businesses
Small businesses have warned the government that the new tax could place ‘additional burdens’ on them, which would require extra funding. Additionally, the tax could lead to increased costs for firms, which could potentially be passed on, at least in part, to the consumer.

A small number of consultation respondents suggested that the Plastic Packaging Tax could also affect older people or individuals with disabilities, as manufacturers could be required to change the materials used in current packaging to those which are ‘harder to open’. One respondent stated that the tax could ‘affect the ease of opening medicine’, such as blister packs.

Businesses have until April 2022 to adapt their processes before the introduction of the Plastic Packaging Tax. The government stated that this will give them time to ‘adjust their behaviour’ and help them to manage any potential extra costs they may face.

The Plastic Packaging Tax will undoubtedly affect a significant number of businesses. As always, we will be keeping you up-to-date on all the latest developments in regard to the tax.