The new tax aims to provide a clear economic incentive for businesses to use recycled materials in their plastic packaging. It is hoped the new tax will create a greater demand for recycled materials and increase the recycling and collection of plastic waste to divert them away from landfills or incineration.
As a responsible plastics manufacturer, Spectra broadly supports the move; however, we are aware there are still be some unanswered questions on some aspects of the new tax. As your supportive packaging partner, we are here to help you prepare for the tax the best we can.
So what do we know about the Plastics Packaging tax?
- The new levy will apply to the majority of plastic packaging sold into the UK, regardless of whether it is manufactured or imported into the UK.
- The tax will not apply to products made in the UK and then exported prior to use, although proof of export will be required.
- Plastic packaging will now require a minimum of 30% recycled content to be exempt from the tax.
- Plastic packaging that contains less than 30% PCR will be subject to the tax from 1st April 2022
- The tax will apply to all businesses that manufacture or import over 10 tonnes of plastic packaging per tax year, introduced into the UK market.
- The tax will cost £200 per metric tonne per tax year.
- The tax will be recovered through invoices and subject to VAT. For example: A bottle weighing 24g = 24kg per 1,000. £200 x 0.024 tonnes = £4.80 per 1,000 PPT (+VAT).
Introducing PCR30 – Spectra’s PPT ready solution
As part of our long-term desire to see recycled content embraced by all customers moving forward, in 2018, we presented PCR10, a bold new standard that saw a minimum of 10% PCR added to all our HDPE & PET bottles.
PCR10 was hugely important to Spectra as we strived to take the lead rather than leave the onus with our customers.
Since its inception, the scheme has proved popular with customers wishing to package their products responsibly. The initiative has evolved, with many customers looking to increase levels beyond the original 10% after seeing that small changes often make significant differences.
On the back of the successful PCR10 roll-out, Spectra decided to go further by introducing PCR30 in 2021. This latest initiative benefits from all the environmental advantages of its predecessor but also satisfies the requirements for exemption from the forthcoming Plastic Packaging Tax.
The current HMRC guidance is unclear on the impact of including additives such as masterbatch in plastic packaging. However, Spectra has put measures in place to ensure all new products manufactured under the PCR30 scheme meet the tax requirements regardless of additive requirements by using a mix of 35% PCR materials combined with 65% virgin materials.
All qualifying new products from Spectra will be quoted using the PCR30 initiative as standard. Items using the PCR inclusion levels will be clearly marked on all quotes and on order confirmations, delivery notes and invoices. However, please note that depending on material types, it is not possible to offer PCR30 for all products as PCR is not always available.
What do you need to do next?
- As standard, all new products will be quoted to include our PCR30 initiative wherever possible. Should customers wish to increase levels of PCR usage or opt-out altogether, they will need to notify us when requesting a quotation.
- Because PCR10 will be discontinued, customers with existing products using PCR10 can either advance to PCR30 or remove PCR altogether from their packaging and be subject to the tax. It is vital customers with existing PCR10 products let us know how they wish to proceed. Products that are not reviewed will automatically be moved to virgin material and be subject to the Plastic Packaging Tax.
- Increasing the levels of PCR in a product will require new colour standards to be issued. These will be issued from the first production run at the new level unless otherwise agreed.
- Customers wishing to move exiting products into PCR30 or include higher levels can contact our customer services team, who will help facilitate the change.
The PCR Supply Chain
Spectra is mindful that the introduction of the new Plastics Packaging Tax could initially impact the supply of recycled content on the market. With this in mind, if we are unable to supply your product with the requested levels of PCR, we will provide the following options:
- Option one – Delay the manufacture of your product until enough PCR is available to produce it to your required specification.
- Option two – Reduce the amount of PCR in your product to enable manufacture. However, if such a reduction takes you below the 30% threshold, the plastics packaging tax will be applied, and you will become liable for that cost. In all cases where there is a reduction in PCR used, unit costs will be adjusted to reflect the revised balance of materials.
For more information
In the coming weeks, we will publish a helpful “Understanding the plastic packaging tax” guide, which we hope will clarify some of the key points of the tax. If you wish to know more now, further information can be found on the UK government website at: GOV.UK (www.gov.uk)
If you have any queries about the Plastics Packaging Tax, please do not hesitate in contacting us. On +44 (0)1986 834190 or email sales@spectra-packaging.co.uk.
