A missed opportunity? UK Plastic Packaging Tax raises £276M in first year but faces industry frustration

21 Aug 2023 --- The UK’s HM Revenue and Customs (HMRC) has published its annual report and accounts for 2022-2023, revealing that it collected £276 million (US$351 million) in plastic packaging tax (PPT) – £41 million (US$52 million) over its target.

The government body details that as of August 8 this year, 4,142 businesses registered to the PPT, and of the total plastic packaging declared by the businesses, 52% was manufactured in the UK, while 48% was imported into the country.

According to HMRC, 39% of the total plastic packaging manufactured in and imported into the UK was declared taxable under the PPT. Of the remaining 61%: 40% contained 30% or more recycled plastic, 21% was either exported, intended for export or converted, and less than 1% was exempt because it was used for the immediate packaging of human medicines.

Recycling infrastructural gaps
PPT was implemented in the UK in April 2022, but many criticized the legislation’s stipulations for failing to guarantee funds raised by the levy would be used for building recycling infrastructure. 

We previously spoke to industry experts about how the legislation failed to take vital economic considerations into account, how it may impact small businesses, and what can be done to develop the tax to improve recycling rates effectively. 

While the PPT was introduced to boost recycling rates, the industry is troubled by the collected funds not dedicated toward recycling infrastructure.With the government figures on the first 12 months of PPT collection, Packaging Insights speaks to Robbie Staniforth, director of innovation and policy at Ecosurety, for a review.

“The £41 million (US$52 million) of additional income that the Treasury has collected shows how the government has missed an even bigger opportunity than the industry first thought,” he says.

“The funds should be allocated to solving the plastic collection, recycling and littering issue. While it shows that implementation has been a relative success in terms of companies paying the tax, it does not equate to an increase in recycling.” 

Who reaps the benefits?
The main concern previously voiced by industry experts related to money raised through the levy not necessarily spent on needed recycling infrastructure but merely collected by the British Treasury to be spent as it sees fit.

A British Plastics Federation spokesperson stated that the lack of assurance over where the tax will be spent is troubling, as advanced recycling methods are increasingly important in tackling plastic pollution and public investment is essential.

“Further investment in mechanical and chemical recycling and enabling this within the design of the tax could help boost recycling rates for plastic packaging. Additionally, consideration should be given to the introduction of robust industry-recognized verification and certification systems to help prevent fraud,” they stressed.

The UK government applies the tax to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic. “It was introduced to provide a clear economic incentive to use recycled plastic in packaging and stimulate an uptake in recycling and collection of plastic waste,” HMRC declares.

But, for Staniforth, the tax is yet to successfully drive up recycling rates by creating end-market demand. “It is still early days, though. We will watch with interest over the coming years in the hope that the tax take reduces because of higher levels of recycled content being utilized in plastic packaging,” he concludes.

By Radhika Sikaria