Plastic Free July: What you need to know about Plastic Packaging Tax

As this month marks Plastic Free July, it’s sensible to think about your business’s sustainability credentials and take steps to reduce your reliance on single-use plastic.

As part of the Government’s commitments to reduce plastic pollution, the Plastic Packaging Tax (PPT) provides a financial incentive for businesses to develop and use recycled plastic or other forms of packaging in their production processes.

PPT affects lots of businesses that use plastic packaging to protect and secure their goods and even if you don’t owe tax on your plastic packaging, you still may need to register for PPT.

Here’s a reminder of what your PPT obligations are and how to make sure you comply.

Registering for the Plastic Packaging Tax

If you manufacture or import plastic packaging in the UK and it contains less than 30 per cent recycled content, it is likely to be taxable.

From 1 April 2025, PPT is charged at £223.69 per tonne – a cost that adds up quickly if your business is shifting a lot of plastic.

HM Revenue & Customs (HMRC) requires businesses to register if either of the following applies:

• You have manufactured or imported 10 tonnes or more of finished plastic packaging in the past 12 months.
• You expect to manufacture or import 10 tonnes or more of finished plastic packaging in the next 30 days.

This is the case even if none of the packaging you manufacture or import is liable to be taxed.

If you are liable for PPT you must also highlight this on any invoice issued to a business customer, including the amount of PPT that has been paid on the packaging concerned.

What counts as plastic packaging?

PPT applies if a chargeable plastic packaging component is produced in the UK by a person acting in the course of a business, or where it is imported into the UK for the same purpose.

According to the legislation, this charge can only apply to “finished’ products.” This is a product that is:

“Designed to be suitable for use, whether alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain of the goods, from the producer of the goods to the consumer or user.”

Many common single-use packaging products for use by a consumer fall within the scope of the PPT, such as plastic bags, bin liners, nappy sacks, disposable cups, plastic cutlery in meal packs,

However, plastic packaging also covers many items not typically seen as packaging, including bottle caps, sachets, and even labels. Reusable items (such as crates made of plastics) and intermediate bulk containers (IBCs) used to transport goods are also counted as plastic packaging.

If your packaging is made from multiple materials and plastic is the heaviest material by weight, this counts as a plastic packaging component for the purposes of the tax, meaning PPT is liable.

PPT is not charged on plastic packaging that is designed to be used during the presentation of goods, as long as the packaging is readily reusable.

The wide definition within the legislation and the fact that it incorporates both single-use and some re-usable packaging products mean you could be unwittingly caught out by the tax.

Exemptions

There are exemptions to PPT on certain plastic packaging, including:

• Packaging used for human medicines.
• Transport packaging for imported goods (like crates and pallets).
• Long-term reusable items, such as retail stands.
• Certain exports under particular conditions.

There is also a deferral of liability to the PPT if the product is exported and meets the direct export condition.

The packaging on products that meet this condition can defer the payment of the tax for up to 12 months.

However, exemptions still need to be included in your 10-tonne tally when working out if you need to register.

What happens once you’re registered?

Once you’re registered for PPT, you’ll need to submit four quarterly returns a year.

As part of this quarterly reporting, you must:

• Keep meticulous records, even if you’re not paying any tax.
• Declare what plastic packaging you’ve manufactured or imported.
• Be able to prove the recycled content, if asked.

Missing the deadline or making an error on your quarterly returns could result in an enquiry or investigation from HMRC.

Liability for suppliers

If you are importing packaging or working with overseas suppliers, you are still liable for PPT.

This means you must ask your suppliers to provide you with the required evidence, including the recycled content of plastic packaging and material weights.

Be aware that even if you do not believe you have an obligation to register, you can be made secondarily, jointly, and severally liable for the tax where you know or ought to have known that PPT has not been paid, which is why it is important to include PPT on invoices and consider your contracts with customers and suppliers.

Can you deregister?

If your business drops below the 10-tonne threshold, you can apply to deregister from the PPT.

However, you will still need to submit a final return and pay any outstanding tax.

Butterworth Barlow

If you are not sure whether you need to register, what counts as packaging, or how to track recycled content across your supply chain, don’t leave it to guesswork.

Our expert chartered accountants can help you manage your tax obligations and register for PPT.

We’ll explain what you’re liable for, identify any reliefs or exemptions, and submit your quarterly returns, giving you peace of mind that your plastic tax requirements are being taken care of by the professionals.

Get in touch and let’s chat plastic. We can help you stay compliant while doing your bit for the planet.