Plastic Packaging Tax: Your questions answered!

Plastic Packaging Tax Webinar

We recently hosted a webinar focusing on the upcoming Plastic Packaging Tax, during which our panel of experts discussed how the Tax may affect businesses, and the value chain as a whole.

As a reminder, the Tax will come into operation in April 2022, and will apply to plastic packaging manufactured in, or imported into, the UK which contains less than 30% recycled plastic. It will be charged at £200 per tonne of packaging.

During the webinar, we received lots of interesting questions, some of which were answered during the session. However, we didn't manage to answer every question live, so please see below the answers to many of the questions that were submitted.

If 30% recycled content can't be used in all packaging, for example some food packaging, will this be exempt from the tax? If not, are the producers liable for this?

There is no exemption in the tax for materials which can't contain 30% recycled content. But this will act as an incentive to stimulate industry demand and investment, to develop the infrastructure, and to ensure the supply of enough material. There are questions around why the tax specifies 30% - why not more or less? This is the first plastics tax, so in order to have simplicity, 30% has been deemed the threshold, but there may be a review of this at some point in the future. Each polymer is different, and each one has its own challenges and its own existing infrastructure, so there will be different dynamics between them. What is certain is that the tax will stimulate demand, and that's what we need in the UK to invest more and recycle more.

Will the Tax still be counted alongside other obligations? Won't that mean plastics are being counted twice?

Extended Producer Responsibility is looking to incorporate recyclability into design (i.e. can it be recycled), and the Plastic Packaging Tax is looking to incorporate the recycled plastic. So businesses ideally need to have recyclable packaging so they pay lower modulated fees under EPR, and they need to include recycled plastic to avoid the Plastic Packaging Tax. That would be the ideal scenario to minimise costs under the separate schemes.

Why are compostable/biodegradable plastics included as taxable under this scheme?

The concern surrounding biodegradable/compostable plastics or packaging, for both the tax and EPR, is that this type of packaging is not deemed suitable for the UK recycling infrastructure. On the manufacturing side, they may save some carbon emissions, but when it comes to end of life management there's a risk of cross contamination in the organic sector (composting, anaerobic digesters etc.), but also in the mechanical recycling of traditional plastics. That's why biodegradable/compostable plastics are being included in the tax, along with other areas.

What does the term 'blockchain' mean?

The concept of blockchain is that information is recorded that makes it more difficult to hack or cheat the system. Digital transactions will be duplicated across a network, so it may be a better way to trace materials. In terms of how that works in the waste sector, we have already been building up good data as with the producer sector; but bringing it all together, allowing material and data to be traced through one system, is going to be absolutely key. There is currently research being undertaken into how blockchain is being used in other sectors to see how it applies to waste, both through EPR and the tax.

If a retailer sells a product containing no recycled plastic, how much of the tax does the retailer pick up? Is the tax shared through the supply chain, and how would this work?

The intention is that the cost is shared through the producer chain, up to the retailer. However, it is not specified within the rules and instructions that have come out so far exactly how this will happen, and therefore it feels like it's been left as a business transaction. There will be requirements to show payments of the tax on invoices to show everyone's playing their part, but there is a concern that the tax may be used as a negotiating tool, and will almost disappear within the wider business negotiations of packaging for the retailer. This is something to watch carefully. There isn't one answer but it is going to come down to business value chains. Hopefully any retailers further down the chain who aren't playing their part will be recognised in some way and action will be taken, but for now it has to be a business transaction unless further guidance comes from the Treasury.

Veolia UK _ The case for a plastic packaging tax in the UK

Has the government confirmed how this tax will be tracked from April if there are no set standards, certifications or systems currently in place?

More information will be provided in the secondary legislation and guidance later this year, but we know there will be certain requirements on record keeping for example. The guidance that was recently published by the government includes information as to what businesses should do now to get ready for the tax. You can find more information on that here.

Does food grade recycled plastic involve adding a thin layer of virgin plastic that touches the food, with the outer layers being recycled plastic?

If packaging is in direct contact with food, it needs to be food grade quality, without question. But if the recycled resin is not food grade approved, the authority might accept what is known as ABA layering, where you have a sandwich style layering of food contact, non-food contact, food contact. However, if you do so, you are at risk of increasing the amount of plastic used to sandwich the material in the middle, so it depends on each polymer. For some polymers it's worth doing it, for others it's not because it would just triple the amount of resin.

Is plastic packaging surrounding medication exempt from the tax?

There is an exemption for plastics used for medicinal products, but it is a specific exemption. Businesses can claim the exemption when they have produced or imported plastic packaging for immediate packaging of a medicinal product - the definitions for 'immediate packaging' and for 'medicinal product' are as per the Human Medicines Regulations of 2012. Businesses would have to meet those definitions in order to qualify for the exemption.

Accepting that pharmaceutical packaging can be exempt, would secondary packaging, for example LDPE shrink wrap that is applied around pallets of product, be included?

Transportation packaging for the purpose of imports is exempt. Transportation packaging used to transport a product within the UK or outside of the UK would not qualify for the exemption.

Does the tax apply to plastics which are classed as functional rather than packaging e.g. plastic parts for printers?

The tax will apply to packaging components that can be defined as a product that is designed to be used (either on its own or with other products) to contain, protect, handle, deliver or present goods when they are being moved from the manufacturer to the user or consumer; or which is designed to be used solely or mainly by the user or consumer to transport, store or preserve goods. Therefore, it is our current understanding that the example of plastic parts for printers would fall outside of the scope of the Plastic Packaging Tax.

Please note that this information is based on our current understanding, and cannot be taken as tax advice.


For more information, visit our Plastic Packaging Tax Hub

-Further Reading-

Consistency of collections: what will be the impact?

Following on from the EPR and DRS consultations, Defra (the Department for Environment, Food & Rural Affairs) have published their latest consultation, on consistency of collections.

Supporting businesses to adopt a circular economy

Eliminating single-use plastics has been high on the sustainability agenda in the UK for a while now, with items like plastic straws and cotton buds being banned in the last couple of years.