Plastic waste tax set for 2022 launch

The Treasury plans to go ahead with plans for a single-use plastic waste tax, covering all plastics and chargeable by weight, although it will not become law for three years

Despite the growing problem with single-use plastic waste, the tax charge will not be introduced for three years.

First announced in March 2018, the government has indicated that it will go ahead with legislation to bring in the tax charge from April 2022.

Detailed proposals will be released at Budget 2019 this autumn and HMRC will publish a technical consultation on the detail of the tax design at a later date. Draft legislation will be published for consultation in 2020.

Over two million tonnes of plastic packaging are used in the UK each year and the majority of this is made from new, rather than recycled plastic.

Plastic packaging is typically only used for a short period and then disposed of, and accounts for 44% of plastic used in the UK, but 67% of plastic waste.

The government plans to charge the tax at a flat rate per tonne of a product. The consultation outlined that charging by weight aligns with the current Packaging Producer Responsibility regulations and simplifies the administration of the tax.

There will be costs associated with registering and reporting, although details of the new system have not been finalised. It is possible that there will also be some exemptions to the rules, with consultation respondents calling for a low bar for the de minimis threshold.

The majority of respondents rejected the government’s proposal to exclude filled packaging imports, and just under half of respondents disagreed with a single 30% recycled content threshold, highlighting the level of support for a plastic tax.

The consultation also set out plans to exclude UK manufacturers from the tax charge if they directly export chargeable plastic packaging, although this was criticised by some respondents who said that the charge should be universal to support the environmental rationale and allow the UK to set a global example. Some respondents thought that not taxing exports could lead to UK manufacturers targeting the export market and not making the effort to incorporate recycled content.

The government has indicated that ‘the tax will be set at a rate that provides a clear economic incentive for businesses to use recycled material in the production of plastic packaging, which will create greater demand for this material and stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration’.

For all areas of the tax design, the government said it ‘will continue to consider which approaches will best support the objectives of the tax, are most administratively feasible and do not have a disproportionate impact on business’.

The Treasury will also to work closely with Defra to ensure that the plastic packaging tax complements the reforms to the Packaging Producer Responsibility regulations and proposals for consistent collection of waste in England and a potential Deposit Return Scheme for drinks containers.

The consultation received a record 162,000 responses, highlighting the strong public interest in action in this area.

Treasury consultation, Plastic packaging tax: summary of responses

Accountancy Daily