Our comprehensive guide to the Plastic Packaging Tax

The Plastic Packaging Tax (PPT) was dreamt up with good intentions as a policy lever to change behaviours around single-use plastics and encourage the use of recycled plastic instead of new plastic within packaging. The harmful impact of single-use plastics on the environment has been extensively reported for all to see. Something had to change.

But almost two years after its introduction, how effective is the tax, and has it been fairly implemented to ensure the right businesses in the supply chain are encouraged to change their ways?

This blog considers the impact of PPT and what can be done to limit the effect on supply chains.

What is the Plastic Packaging Tax?

PPT was introduced in the UK on 1st April 2022. The tax aims to reduce the environmental impact of single-use plastics and encourage the use of recycled plastic. It applies to businesses that manufacture or import ten or more tonnes of plastic packaging into the UK over 12 months that does not contain at least 30% recycled plastic. Note that packaging made of at least 30% recycled plastic still counts towards the 10-tonne registration threshold.

The tax covers consumer goods, such as cling film, bin bags, and party cups, and plastic packaging components that hold food and goods, including plastic used in the transport of multiple items.

How much is the Plastic Packaging Tax?

The current charge is £210.82 per tonne, which increased from £200 per tonne from 1st April 2023.

Who pays Plastic Packaging Tax?

Liability for the tax falls with the business manufacturing or importing the qualifying packaging. For UK manufacturers, the one hit by the tax is the one that completes the ‘last substantial modification’ to the plastic packaging component. Businesses liable must submit quarterly returns to HMRC.

How is the Plastic Packaging Tax going so far? Is it fair?

HMRC originally forecast that 20,000 manufacturers and importers of plastic packaging would register for PPT in its first year. However, we submitted a Freedom of Information request to check how many businesses had registered. Our enquiry revealed that only 3,729 organisations had signed up to 31st March 2023 (the last day of the first full year of PPT).

This suggests a need for more clarity surrounding the original criteria of PPT. Many people are still asking Google, “What is the Plastic Packaging Tax in the UK in 2023?”

We believe the tax has been poorly thought out. A haphazard consultation process and a lack of clear guidelines resulted in HMRC giving answers on what qualifies as taxable packaging on a case-by-case basis. The figures suggest many businesses still haven’t registered or enforcement is poor.

A lack of clarity and confused logic and consistency means some firms like ours – a key supplier to the logistics and supply chain sectors – are unfairly targeted for supplying virgin plastic products that can remain in a supply chain for up to 10 years (and in some cases longer), depending on how they are used and handled.

For full transparency, in the first year of PPT, the annual cost to our business stood around the £250,000 mark. This money could have been better spent investing in plans for further growth, more R&D, and rewarding and developing our brilliant people.

What’s the difference between single-use plastics and plastic pallets?

It’s plain to see that reusable plastic pallets are significantly different from single-use plastics like plastic water bottles, food packaging, and shrink wrap and, therefore, shouldn’t be treated the same way. But for PPT, they are treated the same.

It just doesn’t make sense when, for example, plastic cases for reading glasses or the case a drill is sold and stored in receives exemption from PPT.

In addition, goplasticapllets.com has pioneered an industry-leading recycling scheme, which hasn’t been considered. Unlike single-use plastics, none of our products end up in landfills or the ocean.

Without a doubt, there is an undue burden on our environmentally-friendly plastic pallets. Because they can typically last for around 10 years, they are a viable eco-friendly alternative to traditional wooden pallets. We are contributing positively to sustainable supply chains and reducing deforestation, yet we are being penalised. Our virgin plastic pallets (an essential component of the food supply chain) are classified the same as single-use plastics when, in fact, they are part of the circular economy.

We are an eco-conscious business, and we have been handed an unfair disadvantage. Read more about the burden the tax is placing on companies like ours and how we tried to contest it in our previous blog post here.

You can also read our open letter to the Prime Minister here.

How does the Plastic Packaging Tax impact the supply chain?

Understanding PPT exposure requires enterprise-wide collaboration and insight across the supply chain.

A Forbes article on how the UK plastic tax is reshaping global supply chains explains, “To calculate the tax liability on a single product, teams company-wide have to factor in every plastic component of its packaging and the impact of its recyclability across the entire internal and external supply chain.”

The idea of PPT is generally good – it should drive businesses to look at ways to mitigate single-use plastics and consider reusable rather than single-trip plastic packaging where possible. This might involve changing packaging altogether, switching to paper-based packaging or reusable plastics, reducing overall packaging use, or introducing schemes to return packaging.

Circular economy partnerships will start to grow, and that is where goplasticpallets.com will benefit because customers can see how we work. We make plastic pallets and crates from more than 30% recyclable materials or virgin plastic (required in several industries, including food, pharma and chemicals). They can be cleaned to specified standards and reused for a significant number of years. Add in the fact that we provide a pallet recycling service, and we are a credible plastic pallet supplier supporting the growth of the circular economy.

Over 93% of our plastic pallets are made from recycled plastic, which means we are leading the way to sustainable, multi-use, recycled plastic pallets and an environmentally conscious supply chain.

What other impacts are there?

Cost increase 

Of course, when it comes to any sort of tax, costs will inevitably rise, and this will impact everyone across the supply chain.

In terms of plastic pallets and pallet boxes, we have worked hard to limit any price rises wherever possible, and we are pleased our customers still have access to incredibly competitive prices for innovative products that deliver long-term ROI.

Data capture and administrative burden: 

Businesses directly impacted by PPT must capture the data required to report to HMRC. This exercise isn’t as straightforward as it seems. The tax has placed significant additional administrative requirements on organisations, which has further cost implications.

Our customers purchasing products with less than 30% recycled material can be rest assured that we take care of all the necessary administration and declarations to make quarterly payments to HMRC – essentially making the products “PPT Tax Paid”, similar to alcohol, cigarettes and petrol.

This provides our customer base with peace of mind, which will become increasingly important as we have already heard from several clients who have been contacted by HMRC to see if they are due to pay PPT. Thankfully, they are not, but we always welcome our contacts to reach out to us if they have any questions or queries.

For plastic packaging tax guidance, see the government’s website here.

Why use goplasticpallets.com?

Whether you have been using plastic pallets for years or are still transitioning from wooden pallets, we have the pallets you need. We stock more than 160 different plastic pallets to fit any application – as well as nestable plastic pallets and hygienic plastic pallets. In addition, our folding large containers and our foldable sleeve packs are both innovative and offer huge efficiency gains.

Best of all, by using goplasticpallets.com, you’ll hit your sustainability brief (we are leading the way in recycling plastic pallets and boxes in the UK).

To find out more about our plastic pallets, contact our expert team. Watch this space for more news on PPT – we’ll continue to campaign for fairness and update you when we learn anything new!