The PPT applies to plastic packaging manufactured in or imported into the UK © Photo by Richard Baker / In Pictures via Getty Images
The PPT applies to plastic packaging manufactured in or imported into the UK © Photo by Richard Baker / In Pictures via Getty Images

Plastic packaging tax deemed 'not fit for purpose'

in Law
4 April 2023

Less than one in five eligible firms paid the plastic packaging tax (PPT) in 2022, according to the results of a Freedom of Information (FOI) request – but confusion over who's eligible is leading to calls for it to be scrapped entirely.

PPT applies to plastic packaging manufactured in, or imported into the UK, that does not comprise at least 30% recycled plastic. From April 2023, the tax stood at £210.82 per tonne of these materials.

But according to a response to a FOI request by packaging firm Go Plastic Pallets, just 3,426 businesses paid the tax between its introduction on 1 April 2022 and February 2023.

This represents 17% of the anticipated 20,000 firms expected to be paying it.

Commenting on the figures, Plastic Pallets managing director Jim Hardisty said he now wants the tax to be “scrapped completely,” and said it was “not fit for purpose”.

Hardisty said: “I do believe HMRC started off with good intentions – by looking to drive down the use of single-use and limited-use plastics and packaging, such as plastic water bottles, food packaging, shrink wrap.”

However, he said lack of clarity about the rules has meant there is confusion around the qualifying criteria for the tax – leading some to be able to declare themselves tax-exempt, while others are being charged when they shouldn't be.

He said: “As more people asked questions due to a lack of clarity, it became apparent there was no logic or consistency around qualifying criteria. We were recently informed our virgin products would be subject to the tax – which is baffling.”

The FOI data shows that more than 254m tonnes of plastic packaging were declared by companies, with nearly two-thirds (61%) of it being registered as tax-exempt.

British Plastics Federation (BPF) director of plastics and flexible packaging Brian Lodge told Supply Management the government is “missing an opportunity” to use the money gained by the tax to invest in its recycling capabilities.

“Any revenue raised from the Plastics Packaging Tax to be ringfenced and spent on improving the UK’s recycling infrastructure and expanding the country’s capacity to recycle plastic. Currently, the money goes to the Treasury and we really hope this missed opportunity to hugely increase investment in UK recycling is addressed,” he said. 

“At this point in time, due to existing regulations and the type of plastics required for particular packaging products, some companies do not have an alternative to using ‘virgin’ plastic, so have no choice but to pay the tax.”

However, a spokesperson from packaging firm, Duo UK, told Packaging News: “It’s much too early to say whether the tax is a success or failure.”

The spokesperson added: “We’ve seen a huge spike in the number of organisations submitting PPT returns since the first quarter, because of growing awareness about the Extended Producer Responsibility (EPR) policy. This comes into force this year and is encouraging more and more businesses to think about their packaging compliance.”

Despite the lack of uptake, HM Revenue & Customs says it still collected £195m between April 2022 to the end of January 2023 – just under its initial estimate of £200m from the tax for the entire year.

Between October and December 2022, 3,220 companies completed PPT returns, which was 38% higher than the 2,328 companies that made submissions during the first quarter of the tax.

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