Ecoveritas issues warning to British businesses following UK Plastic Packaging Tax hike
29 Nov 2023 --- Environmental compliance specialist Ecoveritas has issued a stark warning to businesses, urging them to thoroughly review their plastic packaging tax (PPT) obligations following the announcement of a rate increase in the UK government’s Autumn Statement.
Andrew McCaffery, chief strategy officer at Ecoveritas, stresses that businesses pay attention to the PPT rate increase amid other tax-related headlines. “While many businesses will have noted the headline-grabbing tax cuts in the Autumn Statement, it’s important not to overlook the increase in the PPT rate.”
According to McCaffery, many businesses might find it more cost-effective to explore alternatives such as plastic-free or recycled plastic options. He advises firms considering paying the tax again in the next fiscal year to meticulously check their PPT obligations to avoid overpayment.
“Many businesses appear to have simply chosen to pay the tax when it was first introduced at a rate of £200 (US$253) per metric ton in 2022. This is borne out by the fact that HM Revenue & Customs took £41 million (US$51 million) more than it had forecast between April 2022 and March 2023,” McCaffery continues.
“In April, the rate will be substantially higher than when it was first introduced. We would advise any businesses thinking of paying the tax again next year to check, check and check again when it comes to their PPT obligations — not only will this ensure they do not overpay, but they may also find that switching to plastic-free or recycled plastic is a more viable option now.”
Price inventive
PPT, set to rise in accordance with the consumer price index (CPI) at the beginning of the upcoming financial year, will see a hike of over £7 (US$8.90). Among several measures, this change brings the new levy to £217.85 (US$273.38) per metric ton of in-scope plastic packaging manufactured or imported into the UK starting April 1, 2024. Until then, the existing rate of £210.83 (US$267.32) will remain in effect.
HMRC justified the tax hike as an incentive to promote recycled content in plastic packaging.
In addition to the immediate increase, the HMRC’s announcement hinted at potential alterations, including additional rate hikes and a rise in the minimum recycled content threshold. Currently, plastic packaging with at least 30% post-consumer recycled content is exempt from the tax. An increase in this threshold could bring a more extensive range of plastic packaging under the tax’s scope.
The HMRC justified the rate increase by stating: “Increasing the rate of PPT in line with CPI maintains the real terms value of the price incentive to use recycled plastic and supports the government’s environmental goals.”
But Louisa Goodfellow, Ecosurety’s policy manager, told Packaging Insights that “the announced increase in the per ton cost of the tax may eventually start ensuring the tax has the desired effect and provide a financial incentive to use more recycled content, but not until complementary packaging policies (such as Simpler Recycling in England and EPR for packaging) increase the availability of secondary material via increased recycling rates.”
Goodfellow further illustrated that it would also be helpful if the money raised from the tax were “hypothecated and reinvested into UK reprocessing infrastructure, which under current plastic packaging tax legislation is not the case.”
Meanwhile, McCaffery highlights the dynamic nature of PPT obligations, noting: “Less than two years after its introduction, the PPT rate has already jumped sharply, proving that this is a constantly shifting situation where obligations can change at very short notice.”
By Radhika Sikaria
