New Plastic Packaging Tax FAQs

From April 2022, a new tax will apply to plastic packaging in the UK. Plastic packaging that doesn’t contain at least 30% recycled plastic will be subject to the new levy, whether manufactured in the UK or imported into the country. Plastic packaging is defined as packaging that is predominantly plastic by weight, or where the heaviest element of the packaging is plastic.  

The UK Government has introduced this new tax as an economic incentive for businesses to use recycled material which will create greater demand for recycled materials, and in turn increase levels of recycling and collection of plastic waste diverting it from landfill, incineration and export.  

Below we answer some of our customers frequently asked questions, for more detail and to discuss how the tax will affect your products please get in touch on 01692 501020 or email sales@coda-plastics.co.uk

How much will the tax be?  

The new plastic packaging tax (PPT) will be charged at £200 per tonne, for packaging with less than 30% post-consumer recycled (PCR) plastic content.   

The tax will be charged by weight, to any manufacturer producing more than 10 tonnes of plastic a year.  

What will the tax apply to?  

The tax will be applied to all packaging that is predominantly plastic by weight, and packaging as a product (eg. cling film and sandwich bags).  

The tax will apply to each plastic component of the packaging of an item. So if a drinks bottle is made of virgin PET but it has a cap made of 50% PCR, the levy will only apply to the bottle and not the cap.  

Are there any exceptions to the tax? 

The plastic packaging tax will not apply to packaging which is the immediate packaging of licensed human medicines, although outer packaging and secondary packaging will be subject to taxation.  

Transport packaging to import products into the UK will be exempt. 

How will PCR affect the look and colour of packaging?  

Including PCR materials will affect the appearance of packaging, with a higher percentage of PCR resulting in more noticeable and significant aesthetic changes. 100% PCR may be desirable from an environmental and marketing perspective but may not be suitable for all products. To ensure compliance with the tax we are recommending a minimum of 35% PCR.  

• Colours will be the key change. Most PCR is coloured grey or green to camouflage contaminant colours, making it very difficult to provide pure white or pastel shades. Using PCR content will dull the finish of colours, resulting in a more matte finish.  
• Colours and levels of contamination may vary significantly batch to batch, resulting in differences between the shades of a final product. We will work with customers to agree standards of acceptable colour ranges to ensure brand consistency. 
• It is not currently possible to entirely remove contamination from PCR, which can result in flecks of colour or black specs. The size and quantity of the particles will vary depending on the level of filtering applied by the re-processing facility.  
• Chemically recycled PCR can provide a more consistent appearance, however this is in very limited supply and has a very high cost compared to other PCR types. 

As the tax comes into effect more products will be seen with colour variance and visible flecks, and customers will begin to recognise that this is a result of the use of recycled materials. Clear labelling and marketing strategies will be necessary to turn the material changes to advantages, signalling brand commitment to environmental concerns.  

Products manufactured by Coda Plastics, containing PCR. The Original Source and Bulldog bottles are 100% PCR PET and the Woolworths SA bottles contains 50% PCR.

What are the limits of PCR? 

There are a number of limitations for use of PCR in packaging, however many of these will improve with scale as more businesses and countries improve infrastructure, especially in regard to sorting and cleaning.  

• There is short supply of high-quality PCR, especially for use with food contact packaging. The low availability of food contact approved materials means we are currently unable to supply recycled packaging for food or drink.  
• Extrusion and injection blown bottles may need to be produced at a heavier weight as PCR contaminants can affect the way a bottle is blown, resulting in thin spots or holes. Depending on the bottle shape, the only way to ensure consistent production quality and leak resistance is to increase bottle weight, which would increase cost.  
• Long term exposure testing may need to be conducted for packaging of chemically reactive or corrosive substances to ensure environmental stress cracking does not become a problem at the level of PCR added.  

What counts as PCR?  

Post-Consumer Recycled plastic is material that has been collected, sorted and processed from kerbside collections. This includes household and commercial collections that have been sent to Material Recovery Facilities (MRF) and sorted mechanically and by hand.  

Post-process or Pre-Consumer Recycled materials are materials that are recycled and reused after the manufacturing process, such as offcuts, test batches and shavings. We already use pre-consumer recycled plastic in our processes and have done for many years. Recycling post-process material allows us a high level of control over material type, consistency and eliminates contamination. Unfortunately however, this type of recycled material is not recognised by the new tax. Pre-consumer waste would count towards the 30% threshold if the material is processed by a re-processing facility.  

How will the tax be applied and who is liable? 

From April 2022, businesses who are liable under the tax will need to report data to HMRC each quarter detailing the tonnage of liable packaging manufactured or imported, evidence of where recycled content exceeds 30% and information on any exemptions.  

The tax will be levied on manufacturers and importers, however the cost will undoubtedly be passed along the supply chain to brands, retailers and consumers. 

HMRC will require all processors to identify on each invoice line the tax that has been paid on the product, providing transparency to customers and evidence of payment.  

Any business purchasing plastic packaging should note that the liability for non-payment of the tax can be placed on other organisations within the supply chain – HMRC will require business customers to take “reasonable steps” to verify the payment of the tax.  

HMRC will be issuing updated guidance on due diligence requirements for business customers, we will update this page as soon as the guidance has been published.  

What is the cost difference between virgin and PCR plastics?  

Demand for PCR materials has been steadily increasing in recent years, and the introduction of this new legislation has dramatically increased demand, but the capacity to reprocess material has not kept up with demand. As a result, prices for PCR materials are soaring and as April 2022 approaches we expect to see the price continue to rise.  

Unless substantial new processing comes online, recycling infrastructure in the UK is not equipped to supply enough material, and enough material of a high enough quality, to keep up with demand. As a result, for many customers the cost of paying the tax will be equal to or less than the cost of using PCR materials.  

As well as the cost of materials increasing there is also a cost factor to the manufacturing process. Production efficiencies may reduce and quality inspection costs may increase as a result of cosmetic and functional failures from use of PCR. 

The decision to incorporate PCR into your packaging or to indirectly pay the levy will be affected by a multitude of factors. Your choice may be purely financial, driven by environmental policies, your customer base or by your branding team.  

We can provide cost comparisons to help you to decide how to adapt to the new legislation and can supply samples of products using various percentage points of PCR. Whether you’re a current customer or a brand looking for a trusted UK manufacturer to guide you through the changes, we can help - contact our sales team on +44 1692 501020 or email sales@coda-plastics.co.uk