Plastic Packaging Tax (PPT) – Key questions and answers

Following on from our recent Plastic Packaging Tax webinar, our Indirect Tax Partner, Jonathan Main, has explained what is covered under the new tax.

Discover how you and your business can comply with the new laws and how it will impact your organisation in the coming years.

Our expert answers your questions

If a business sets up in one of the new Freeport zones, will it be exempt from Plastic Packaging Tax (PPT)?

If a business operates in a Freeport, it can import packaging or raw material for the UK and export markets into the Freeport with Plastic Packaging Tax (PPT) only due on the plastic packaging which is released into free circulation in the UK.

We are a UK-based food processing company trading however registered in the Republic of Ireland. When we tried to register could not get through the first section?

If you are an overseas incorporated business you cannot use the online service to register for VAT.

You should refer to the following link and apply through your Government Gateway account.

If you’re a charitable incorporated organisation, trust, or overseas business not established in the UK or public body, you cannot use the online service.

If we purchase the label in the UK from a UK supplier and then print a label. Are those labels then subject to tax and contribute to our plastic packaging volumes?

Printing on a plastic label constitutes a substantial modification and would potentially need to be included in your plastic packaging volumes.

This determination depends on whether you are going to use the label as part of the packing or filling process for your goods.

If that is the case, the business that undertakes the last substantial modification before you print the label will be liable to the tax.

I imagine this would be your supplier.

We import circa 26,000 MT of fruit, nuts, and seeds each year. The majority of these are in cardboard packaging, a few in hessian bags however some of these cardboard boxes have the goods wrapped in plastic within them. Although not a large volume, this plastic does account for just over 10MT, but, as it is not the primary, are we liable for the tax?

If you are the importer of record and the product you import is wrapped in plastic as its primary packaging, you will be liable to Plastic Packaging Tax as soon as the goods are imported into the UK.

What are the exemptions on pallet wrap?

If pallet wrap is used in a UK supply chain, it is liable to the tax. This would be classed as pre consumer plastic. If pallet wrap is used as tertiary packaging in the import of goods into the UK, it may not be liable to the tax.

HMRC place specific conditions on the packaging for it to be free of tax, which relate to the function of the packaging.

If you export the goods, the plastic packaging is classed as a credit. I’m confused with the export indirect credit from the customer comment. Please can I have more information?

If you sell packaging to a UK customer which exports the packaging from the UK, you can claim a credit as long as your customer provides evidence of export.

When looking at the pallet wrap liability, will the process of wrapping the pallets be considered a substantial process? Or will the manufacturer remain liable for the tax for this?

Wrapping pallets is not a substantial process.

We purchase flat packed bags that are film lined, which we then fill with product, will this count as a substantial process as the shape is altered from the original received shape? In addition, these are purchased pre-printed with all product details on, but we will print a bar code and use-by date, will this process in turn be substantial to make us liable?

Printing does constitute a substantial modification. However, as you are printing prior to filling the bag with your product, the requirement to account for the tax will reside with the business that carries out the last substantial modification, which may be your supplier.

Please could you confirm whether “reused for the presentation of goods” can include the plastic sleeve my finished bedding products are presented in for use on retail shelves/ presentation? For such exempt plastic, do we even need to be concerned with measuring and recording weight?

If the plastic sleeve is retained by the retailer for presentation of other goods for retail sale, rather than used by the customer as packaging for the goods, it will not be liable to the tax.

If this is made clear when you import or manufacture the packaging, you will not need to record it as plastic packaging, as it is not being used for that purpose.

My company manufactures clear plastic book jackets for schools/libraries – Its primary use is for protecting books.Do you think clear plastic book jackets are exempt from tax? I noticed a DVD case is exempt, which is made for the same purpose as book jackets.

A DVD case, together with other items listed in HMRC guidance such as first aid boxes and glasses cases, is exempt from PPT because HMRC accept that its primary purpose is to store rather than package the product.

The question to explore by reference to legislation, guidance, and commercial purpose is whether the primary purpose of a book jacket is to store, present, or protect the book.

Can you confirm please re. the registration requirements? HMRC website says you need to register if importing more than 10 tonnes within the last 12 months, or in the next 30 days.

The tax was introduced on 1/4/22 do we need to look backward for 12 months or as you suggested only look forwards and register at the date we expect to breach the threshold?

You should look backwards but only to 1 April 2022 in assessing whether you breach the 10MT threshold.

We are a group of businesses, and we intend to register as a group for Plastic Packaging Tax. Can the businesses use different approved calculation methods to ascertain the weight of plastic packaging?

Yes. 

Our company purchases from UK companies a range of plastic storage bins. These plastic storage boxes are sent with plastic packaging for use of safe delivery.

Are the plastic storage boxes, not subject to the Plastic Packaging Tax because they are permanently reused?  What about the packaging used for transport purposes? 

As the transport packaging is used within the UK, it will be liable to the tax.

Could you confirm that the plastic storage boxes are not liable to Plastic Packaging Tax?

A plastic storage bin sold to a consumer is not liable to the tax. A storage bin for reuse within a business is liable to the tax.

If we are just a packer that only buys plastic packaging from UK manufacturers and we are not importing any, my understanding is that we are not liable for the tax, and we don’t need to pay any tax.

The question is around the DD, do we still have to keep track of all documentation from all suppliers, whether is more than 30% or less and is this just something that we would keep for our records in case the HMRC is inquiring about the plastic tax paid or not paid by our suppliers? 

You need to carry out due diligence for two reasons. First and most importantly to ensure that your supplier has paid the tax. The 30% issue is more relevant to an importer of plastic packaging that does not wish to pay tax because of the level of recycled plastic.

Please can you confirm that we need to break down and account for the plastic packaging components of finished goods that we import directly into the UK? My colleagues seem to struggle to understand this.

That is correct.

If we import finished goods which have a plastic bag within a cardboard outer is this liable to Plastic Packaging Tax?

Yes.

The HMRC guidance states: “If you import plastic packaging that is already filled with goods, it is treated as a finished packaging component, and you will be liable for the tax on the packaging”

Does this mean it applies to any import goods that contain plastic packaging (except transit materials)?

Yes. 

The importer is liable for the tax on those bottles if meets the threshold. So same rule and concept apply to businesses when importing any raw materials/equipment packed with plastic materials (e.g bag of rice, a toaster).

Those plastic materials will be counted towards the 10T threshold. Is this correct?

Yes, unless it could amount to tertiary packaging.

If you don’t produce 10 tonnes of plastic eligible for plastic tax within a year. Do you need to calculate and demonstrate to HRMC that you don’t go beyond the threshold every month after April 2022 anyway?

You should retain records to demonstrate that you are not required to register for the tax.

If we import DAP plastic bottles and then export them within 12 months – no change to bottles, would these be liable for Plastic Packaging Tax?

If you import product on the basis of confirmed orders to your export customers, you can defer the tax.

If you import product to hold in UK stock, you would pay the tax and claim a credit.

If the packaging is used to store product outside (on a building site) does this constitute being an integral part of the product and/or used for long-term storage? What constitutes long-term?

This packaging might well be subject to the tax. I would need further details.

We import plastic packaging that is filled with goods, but these are used by our customers as point-of-sale packaging as they are barcoded. Is this liable or exempt?

Unless the packaging is reused as point of sale material, it will be liable to the tax.

Please find below key resources

If you require any information regarding the above please do not hesitate to contact our specialist Tax team by filling in the form below.