New Plastic Packaging Tax 2022

HMRC Plastic packaging Tax 2022
New plastic packaging tax 2022

20,000 UK Businesses Liable for New Plastic Packaging Tax 2022: Start Preparing Now

The Plastic Packaging Tax is a new tax set to be introduced in April 2022

Businesses to be taxed on plastic packaging that doesn’t contain 30% recycled plastic

Adjust your business practices now to avoid being hit

What is the Plastic Packaging Tax?

This is a brand-new tax set to come into effect on 1st April 2022.

Even though it’s estimated to impact 20,000 UK businesses, a recent study by resource management firm Veolia found that 83% of businesses aren’t aware of what the Plastic Tax is.

The Plastic Tax will apply to businesses that produce or import plastic packaging (packaging that contains mostly plastic by weight) that doesn’t contain at least 30% recycled plastic.

Producers and importers will pay £200 per tonne of packaging that does not meet the 30% recycled plastic goalpost unless they import fewer than 10 tonnes per year. Such businesses are exempt.

The tax aims to incentivise more environmentally conscious decisions and reduce the amount of plastic sent to landfills and incinerators.

The Plastic Packaging Tax has been in the works since 2017 and was given Royal Assent in June of this year. It will come into effect on 1st April 2022.

This may seem like some time away. However, acting now can minimise the impact later.

How the Plastic Packaging Tax Effects Business

Initially, you may incur one-off costs.

These include training yourself and your staff with the new rules, developing a new framework for filing taxes and registering with HMRC.

If you don’t have an accountant, you will need considerable time to learn how to comply with the new regulations.

If you have an accountant, they will manage this alongside their other duties, although you may wish to ask if they need additional documentation from you.

The Plastic Packaging Tax sets a precedent for environmentally-minded taxes. As climate change progresses, these will likely become increasingly common and impactful. More and more businesses will be impacted.

However, this time to prepare for the Plastic Packaging Tax provides an excellent opportunity to reduce the environmental impact of your business, opening the door to consider other ways to improve your business’s carbon footprint.

Indeed, despite the negative fiscal impact the Plastic Tax will have on thousands of businesses, Veolia found that 84% of business owners support it.

There are also ways to minimise your potential costs.

Preparing for the Plastic Packaging Tax

Reducing the amount of unrecycled plastic you use is the best way to reduce your Plastic Packaging Tax liability.

If importing plastic packaging from abroad, identify whether it contains 30% or more recycled plastic. If not, you may wish to alter your agreement or find a new supplier for packaging that fulfils the tax requirement.

If you manufacture plastic packaging and aren’t already using 30% recycled plastic, you may want to investigate new production methods and establish communication with recycling companies to supply your business.

A proactive, forward-thinking accountant could also be a boon for business. An accountant abreast of tax law changes can help to minimise the impact of the Packaging Tax. Hiring an accountant eliminates the costs associated with training and maintaining your own taxes.

Adjusting business practices takes planning, so start as soon as possible to be ready when the tax comes into effect in April 2022.

For help on how you can prepare for the new tax please contact us today at Tax Expert.

Kind regards Ilyas