BUSINESS HELPDESK
The BMF explains what the new Plastic Packaging Tax means for building materials HELP DESK
TAXING TIMES FOR PLASTIC PACKAGING
YOU WILL PROBABLY be aware that the Chancellor of the Exchequer has decided to introduce a new UK wide tax on plastic packaging that comes into force in April 2022. This is designed to encourage the use of recycled rather than new plastic within plastic packaging. This will in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration. It is likely that many merchants and building materials manufacturers will be amongst the 20,000 businesses expected by the HMRC to be affected by the tax. It is estimated that the construction industry creates approximately 50,000 tonnes of plastic packaging waste every year. The building materials supply chain uses much of this packaging, with products transported on pallets shrink wrapped or bound with plastic straps, and others protected by polystyrene to prevent damage and ensure safe delivery. This packaging is often discarded as soon as goods are unloaded or unpacked.
The primary legislation for the Plastic Packaging Tax is currently before parliament and is not yet law. Secondary legislation will be introduced later in the year. Until both primary and secondary information become law, the information currently available is subject to change. However, it is well worth familiarising yourself with the contents of the government’s policy paper and preparing for the changes ahead. If you haven’t already done so, now is the time to look at what plastic packaging you use – or send to landfill - and review available alternatives and cost implications. For example, we know one manufacturer is conducting trials to reduce the thickness of the shrink wrap it
currently uses on its goods. The rate of tax is set at £200 per tonne. This will apply to all firms that produce or import plastic packaging which does not meet a minimum threshold of at least 30% recycled content. Only packaging which is not predominantly plastic by weight will be excluded. Businesses will also need to keep records and, in most cases, register for the tax, even if all the packaging you manufacture or import contains more than 30% recycled plastic. Those manufacturing or importing less than 10 tonnes of plastic packaging per year will be exempt from tax, but may still need to keep records.
The HMRC has posted guidance online to help you prepare - for example, explaining who will be liable; record-keeping and what exemptions will apply.
August 2021
www.buildersmerchantsjournal.net
This guidance covers various requirements including: • Level of Content: plastic packaging is assumed not to meet the minimum recycled content level unless you can show that it does. • Threshold: If you manufacture or import 10 tonnes or more over a 12-month period, you will have to register regardless of whether you have to pay any tax.
If you manufacture or import less than 10 tonnes of plastic packaging a year, you will still need to keep some records to demonstrate that you are below the tax threshold, and check if you become liable in the future. • Packaging on imports: the tax will not apply to transport packaging used to secure safe transit of imports into the UK, e.g. pallet wrap to prevent physical damage or provide stability.
• Accounting: If you buy packaging on which tax should have already been paid, you must check that it is being properly accounted for to avoid being liable for any unpaid tax yourself. • Invoicing: If you have to account for the tax, your customer invoices will have to state that Plastic Packaging Tax has been paid on the packaging concerned. The HMRC will be publishing more detailed guidance later in the year before the introduction of the tax in April 2022. The BMF will provide further updates for members when more information is available. In the meantime, you are advised to visit the government website and familiarise yourself with the current guidance at https://www.
gov.uk/government/publications/ get-your-business-ready-for-the- plastic-packaging-tax BMJ
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