HMRC reminds businesses to have their say about their ‘plastic tax’ proposal

Due to the COVID-19 emergency, HMRC pushed back the consultation period deadlines on most other policy proposals. Now some of the revised deadlines are coming round. HMRC wrote to industry organisations last week to remind them that the consultation deadline for the plastic packaging proposal, which was due to end on 20^th May, is now 11.45pm on 20^th August.

What is the Plastic Packaging Tax proposal?

The idea to tax plastic packaging was announced during Mr Sunak’s March Budget statement: “From April 2022, we will charge manufacturers and importers £200 per tonne on packaging made of less than 30% recycled plastic. That will increase the use of recycled plastic in packaging by 40% – equal to carbon savings of nearly 200,000 tonnes.”

The actual Budget documentation further explains: “The government will keep the level of the rate and threshold under review to ensure that the tax remains effective in increasing the use of recycled plastic. The government will also extend the scope of the tax to the importation of filled plastic packaging and apply a minimum threshold of 10 tonnes of plastic packaging to ensure the smallest businesses are not disproportionately impacted.”

They don’t want the new tax to be punitive to smaller businesses and there is a question about medical packaging within the consultation questions.

The brand new policy will apply to filled and unfilled plastic packaging “…produced in, or imported into the UK that does not contain at least 30% recycled plastic.”

What’s the point of the Plastic Packaging Tax?

This new tax is part of the government’s overall aims to increase recycling and reduce plastic waste. It gives companies a clear financial reasons to use at least 30% recycled plastic packaging. An expected rise in demand should then boost the recycling of plastic waste, keeping it out of our oceans, land and incinerators.

How much will the Plastic Packaging Tax cost to implement?

HMRC’s initial estimated costs are £6.59m for the IT system to support its implementation and £11.36m for staffing. Then there will be the ongoing costs of collection and administration.

For the consumer, companies may choose to pass on their additional costs. But HMRC feel that this will be a negligible amount as packaging is a small proportion of overall cost in any event.

Businesses are going to face set up costs, like: training on the new policy, HMRC registration to pay the new tax, and how it fits in with the current tax return system. Even if there is no financial outlay, there is a time investment here. And we all know that time really is money.

But this is why HMRC want input from those in the industry, through the consultation process. By getting expert advice at the start, the start up and running procedures of the new tax can be as clear and smooth as possible.

How do I join in with the consultation?

You can access all the details about the policy and the consultation response form online, here.

It is for “businesses, individuals, tax advisers, trade and professional bodies and other interested parties.”

And the deadline is coming around soon. Get your response submitted by 11.45pm on 20th August 2020.