UK Budget: Plastic Packaging Tax to be enforced with £200 per ton penalties

11 Mar 2020 --- As announced at Budget 2018 and following consultation in Spring 2019, the UK government will introduce a new Plastic Packaging Tax from April 2022 to incentivize the use of recycled plastic in packaging. The 2020 Budget, announced earlier today, sets the rate at £200 (US$256) per metric ton of plastic packaging that contains less than 30 percent recycled plastic. This will apply to the production and importation of plastic packaging.

The UK government will keep the level of the rate and threshold under review to ensure that the tax remains effective in increasing the use of recycled plastic. The government will also extend the scope of the tax to the importation of filled plastic packaging and apply a minimum threshold of 10 metric tons of plastic packaging to ensure the smallest businesses are not disproportionately impacted.

The Budget also announces the launch of a further consultation on the detailed design and implementation of the tax, which includes consideration of an exemption for certain types of medical packaging.

In addition to the implementation of the Plastic Packaging Tax, an additional £700,000 (US$905,000) will establish the Extended Producer Responsibility (EPR) scheme, designed to encourage producers to make their packaging more recyclable and reduce the amount of unnecessary packaging in their products. The investment will aim to develop the IT capability to administer the future EPR scheme for packaging.

“Today’s announcement cements a direct financial incentive to use recycled content in new plastic packaging and is a game-changer,” comments Richard Kirkman, Chief Technology and Innovation Officer, Veolia UK and Ireland. “This new green Government and its Plastic Packaging Tax has set in motion a new phase of investment into the circular economy, ensuring we can recycle our way out of the climate emergency.”

“Plastic is an important material which mitigates climate change with a lightweight, food protecting, recyclable solution. This kind of policy makes the UK a lodestar for propelling the world into a new net-zero age,” adds Kirkman.

In a recent interview with PackagingInsights, Libby Peake, Senior Policy Advisor at Green Alliance, called for the UK government to take a more interventionist approach to packaging sustainability to prevent companies from pulling in different directions and creating more consumer confusion.

Global investment in recycled plastics is on the rise. Notably, Nestlé recently announced an investment of up to 2 billion Swiss francs (US$2.08 billion) to pioneer the shift from virgin plastics to food-grade recycled plastics and accelerate the development of innovative sustainable packaging solutions.

Calls for more clarity
The British Plastics Federation (BPF) has maintained concerns that the tax will be applied to packaging that cannot incorporate recycled content due to existing food contact and safety legislation. However, BPF is satisfied that the tax would likely increase the use of recycled materials and pleased that the proposal includes pre-filled packaging to avoid disadvantaging UK businesses, driving jobs overseas and increasing carbon emissions.

BPF also hopes that the money raised by this tax will be invested in upgrading the UK’s collection and recycling infrastructure. “The whole supply chain has already requested that the government address this matter urgently via reforms to the existing PRN system.”

“We also welcome the two-year extension of the Climate Change Agreement (CCA) scheme. As an organization that manages the CCA for the plastics industry, we know this scheme is valued and has helped to significantly reduce energy use,” BPF states.

“The proposed £200 per ton, while less than the sums originally mentioned, will be inflationary for plastic packaging using materials for which recycled content is not possible under food contact regulations and for which alternative plastics cannot be use," adds Martin Kersh, Director at the Foodservice Packaging Association. “We would like to see this difficulty acknowledged and are concerned there is no mechanism for ensuring plastic packaging producers can pass the tax on to their customers. This could threaten the future of some producers.”

By Joshua Poole

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