Plastic Packaging Tax: How to Prepare & Cut Costs

As we enter the end of summer 2022, it’s hard to believe that Plastic Packaging Tax has already been in force for over 4 months. However, whilst HMRC estimates that the tax will affect approximately 20,000 businesses across the UK, many are still unprepared for this new legislation. That’s why we’re sharing some simple steps that any business can take to stay compliant and profitable under the new packaging landscape. It’s true: Plastic Packaging Tax (PPT) will affect tens of thousands of business across the country; with measures ranging from new red-tape paperwork requirements to new charges (per tonne) of plastic packaging. Whilst the legislation is complex, we’ve pulled out some of the key points that Cambrian customers should keep in mind: You must register for PPT if you’ve either manufactured or imported 10 tonnes or more of finished plastic packaging components within the last 12 months, or if you will pass that threshold within 30 days alone. Under PPT requirements, you’ll be required to pay a tax rate of £200 per tonne. This also applies to UK manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic content. You must now account for PPT on your quarterly tax return. This means keeping a full breakdown of the weight of plastic packaging components you’ve finished or imported in each period; the weight exported in the period on which the tax was deferred and a full breakdown of the weight of any plastic packaging for which a credit is claimed if the packaging has been exported or converted into new packaging components. More information on the PPT requirements can be found in the UK government link above, as well as our own dedicated page on the issue. Keep reading to find out more about how your business can take steps to reduce costs and stay compliant! 1. Research and Understand How PPT Will Affect Your Business Like virtually all areas of business taxation, PPT is an area of legislation that is packed with jargon and difficult-to-digest statements. However, it is critical that your business – and particularly those with a responsibility around taxation and compliance – fully understand how this new legislation will relate to your business. The fact is that if you use high volumes of plastic packaging across any part of your customer journey, it’s highly likely that you’ll be affected under this new legislation (that even applies if you’re an importer bringing products into the UK). The key change to prepare for here is in counting your packaging against the lower 10-tonne limit for registration. Like many businesses out there, it’s highly unlikely that you’ll have any experience in this kind of recording and monitoring. Our top tip is to make this step a bit easier by communicating with your packaging suppliers, helping you come to an assessment that is realistic. Otherwise, you could end up with a penalty fee (if you work with Cambrian, it’s a simple matter of getting in touch with our Sales Department). 2. Change Your Approach to Packaging Nobody likes more taxes and more paperwork. However, with a pollution problem contributing to a growing climate crisis throughout the world, it helps to remember the point of this legislation: to encourage more businesses and organisations to use less ‘virgin’ plastic. Packaging that contains at least 30% of recycled plastic doesn’t have to be counted towards PPT, creating a real incentive for businesses to ditch those more environmentally-damaging options. If you haven’t guessed by now, PPT has been created to change your business’ approach to packaging. And, despite what some may say, it can be far more cost-effective to use recycled plastic than virgin plastic. Whether this is viable or not will largely depend on your type of business and the kind of products you’ll sell. Our advice is to regularly review your packaging needs against what kind of packaging is available – your business wallet will thank you for it. Of course, your business may find itself in a situation where there are simply no other alternatives to virgin plastic. In this scenario, we recommend researched solutions that can tick all of the boxes around sustainability and cost-effectiveness. If you intend on researching and developing your own solution, always remember that you could qualify for R&D tax relief. Check out the UK government website for more info! 3. Challenge Your Supplier Whilst your decision-making on plastic packaging has the potential to drive real change in the industry, it is suppliers and manufacturers who can make the biggest impact. If your business doesn’t package goods in-house, you’ll likely be thinking about working with your supplier to manage the new costs presented by PPT. Use your influence as their customer to encourage them to switch to PPT-compliant plastic which can reduce your exposure to the tax. If your supplier is unable to offer flexibility around this, it might be worth making the change to Cambrian Packaging (hello!). Unlike many suppliers of packaging, we can confirm that our packaging will fully comply with all PPT requirements; including meeting our own responsibilities on accounting for quantities and weights of products supplied and our ability to pay the tax as appropriate. When we’re saying we’re leading the way in changing the packaging landscape, we mean it. We continue to expand our ZERO range of bottles, which aren’t subject to PPT thanks to their 30% recycled plastic content. Aside from that, our innovative Ecycle™ range uses 100% Post-Consumer Recycled (PCR) across all of the polymers used in their manufacture. Cut-Costs & Stand Up For Sustainability with Cambrian Packaging Whilst the Plastic Packaging Tax presents new challenges, it also presents new opportunities for companies to innovate and to set themselves aside from their competitors. We’re inviting you to just that. To get started with a new approach to plastic packaging, contact a member of our helpful sales team for a free consultation and advice on meeting your PPT commitments.

For more information on Plastic Packaging Tax: How to Prepare & Cut Costs talk to Cambrian Packaging