When to register for Plastic Packaging Tax
How to apply the forward look test
A business normally manufactures 0.25 tonnes of plastic packaging every month.
On 16 May 2022, they receive an order for 20 tonnes of plastic packaging to be delivered by the end of May.
The business will need to register for Plastic Packaging Tax by 14 June 2022.
They will account for and pay any tax due on all the plastic packaging that they manufacture from 16 May onwards, including their normal production as well as the new order.
The business’s liability date will be 16 May 2022.
How to apply the backwards look test in the first year of the tax
A business normally manufactures 4 tonnes of plastic packaging every month.
On 1 May 2022, they have only manufactured 4 tonnes of plastic packaging between 1 April and 30 April, so do not need to register.
On 1 June, they have manufactured 8 tonnes between 1 April and 31 May, so still do not need to register.
On 1 July, they have manufactured 12 tonnes between 1 April and 30 June, so must now register for Plastic Packaging Tax by 30 July.
The business’s liability date will be 1 July 2022. They must now account for any tax due on all plastic packaging manufactured from 1 July onwards.
How to apply the backwards look test from 1 April 2023
A business normally manufactures or imports 0.5 tonnes of plastic packaging every month.
On 1 April 2023 they have only manufactured or imported 6 tonnes of plastic packaging between 1 April and 31 March, so do not need to register.
They then receive an order for 8 tonnes of plastic packaging which they delivered on 15 April 2023.
On 1 May, they have manufactured more than 10 tonnes over the last 12 months, so must now register for Plastic Packaging Tax by 30 May.
The business’s liability date will be 1 May 2023. They must now account for any tax due on all plastic packaging manufactured and imported from 1 May onwards.
If you’ve deferred paying the tax but have not exported the packaging within 12 months
A business manufactures plastic packaging on 23 August 2022. They intend to export the packaging themselves within 12 months.
They account for the plastic packaging on their July to September 2022 quarterly tax return.
No tax was paid as the business intended to directly export the packaging.
By 23 August 2023 the export has not taken place. This means Plastic Packaging Tax must be paid as the packaging had not been directly exported within 12 months.
Plastic Packaging Tax must be accounted for and paid on the business’s next tax return, which would be their July to September 2023 quarterly tax return.
Claiming Plastic Packaging Tax credits
Claiming a credit for packaging which has been exported
A business accounts for 20 tonnes of plastic packaging on their January to March 2023 quarterly tax return.
They paid the £4,000 tax due in April.
In May 2023, a business customer provides evidence that they exported 5 tonnes of the plastic packaging they purchased.
The business who paid the Plastic Packaging Tax is allowed to claim a credit for the 5 tonnes (£1,000) on their next tax return.
Their Plastic Packaging Tax liability in the next accounting period is 30 tonnes.
They are allowed to reduce this liability by claiming the credit on their April to June 2023 quarterly tax return.
To do this, they enter 5 tonnes (£1,000) in the credit box on their tax return.
Claiming a credit when plastic packaging is converted into different packaging
A business accounts for 30 tonnes of plastic packaging components on their April to June 2023 quarterly tax return.
They paid the £6,000 tax due in July.
They then supply 10 tonnes of the plastic packaging to another business.
The other business uses the plastic packaging components to manufacture new plastic packaging components, which are also liable for Plastic Packaging Tax.
Once they receive evidence confirming the plastic has been converted into a different plastic packaging component, the business who paid the Plastic Packaging Tax is allowed to claim a credit for the 10 tonnes (£2,000) on their next tax return.
To do this, they enter 10 tonnes (£2,000) in the credit box on their next tax return.
They also need to have the original documents to show they have accounted for and paid the tax previously.
Calculating whether multiple material packaging components are plastic
Example 1
A 10-gram carton is made up of:
- 4 grams of plastic
- 3 grams of aluminium
- 3 grams of cardboard
All 10 grams will be considered a plastic packaging component as plastic is the heaviest material.
Example 2
10-gram carton is made up of:
- 2 grams plastic
- 5 grams of aluminium
- 3 grams of cardboard
This component will not be considered a plastic packaging component as plastic is not the heaviest material.
Example 3
10-gram carton is made up of:
- 5 grams plastic
- 5 grams cardboard
This component will not be considered a plastic packaging component as plastic is not the heaviest material.
How to calculate the recycled plastic content of plastic packaging components
Example 1
A plastic packaging component made up of:
- 2 grams of recycled plastic
- 2 grams of virgin plastic
- 3 grams of aluminium
- 3 grams of cardboard
To calculate the proportion of recycled plastic, divide the recycled plastic weight by the total weight of all plastic elements and multiply by 100.
2 ÷ 4 = 0.5 x 100 = 50%
The tax would not be due as the percentage of recycled plastic (50%) exceeds the threshold of the plastic element of the packaging.
Example 2
Packaging component made up of:
- 1 gram recycled plastic
- 4 grams of virgin plastic
- 2 grams of recycled aluminium
- 3 grams of recycled cardboard
To calculate the proportion of recycled plastic, divide the recycled plastic weight by the total weight of all plastic elements and multiply by 100.
1 ÷ 5 = 0.2 x 100 = 20%
In this example, the percentage of recycled plastic does not meet the recycled plastic content threshold. The Plastic Packaging Tax is due on the entire 10g packaging component.
