What packaging is subject to the tax?
Plastic and recycled plastic content
Definition of "finished"
Credits and reliefs
Registering for PPT
Supply chain and due diligence considerations


A new tax on plastic packaging that does not contain at least 30% recycled plastic has been in effect since 1 April 2022. It applies to all plastic packaging that is manufactured in, or imported into, the United Kingdom.

Businesses must pay £200 per metric tonne of plastic packaging but only once a threshold of 10 tonnes has been met.

For some businesses, there has always been a clear expectation that the tax will apply to them, and they have been working through the details to ensure that they meet their obligations from the outset. For other businesses, it has been less obvious, and for some it will still not yet be clear whether they need to engage with the detail of the rules – either the need to register for the tax or to deal with the potential consequences of the regime in their supply chain.

What packaging is subject to the tax?

The plastic packaging tax (PPT) is levied when chargeable plastic packaging components are:

  • produced in the United Kingdom by persons acting in the course of a business; or
  • imported into the UK on behalf of the same.

It applies only to "finished" products and should therefore be chargeable only once in the supply chain. It is not like VAT, which is charged all the way down the supply chain, recoverable by most participants and ultimately borne by the consumer.

A "packaging component" is a product that is designed to be suitable for use, whether alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain of the goods. This is a wide definition, which catches items that may not be thought of as packaging, such as coat hangers and reusable and refillable items (eg, plastic crates and intermediate bulk containers).

Imports of packaging that already contains goods, such as plastic bottles filled with drinks or plastic packaging around goods, are also potentially subject to the tax with some exclusions. Filled packaging components with a primary storage function, such as glasses cases or DVD cases, are excluded by statute, as is packaging that is an integral part of the goods, such as in printer cartridges or tea bags.

The PPT is also not charged on plastic packaging that is designed to be reused for the presentation of goods, such as shop fittings or sales stands.

Products are also subject to the PPT if they are designed as single use packaging products for use by a consumer or user in containing any commodity or waste. This will mean that the person that manufactures or imports goods such as plastic bags, bin liners, nappy sacks and disposable cups is subject to the PPT.

Plastic and recycled plastic content

Even though the PPT is designed to have environmental benefits, biodegradable, compostable and oxo-degradable plastics are treated as plastic for the purposes of the tax.

When determining whether the PPT is chargeable, each component needs to be considered separately. For example, each component of a plastic drinks bottle (ie, the bottle, the lid and any plastic labelling) would need to be considered as separate.

Packaging that contains multiple materials but contains more plastic by weight than any other single substance is a plastic packaging component for the purposes of the PPT. For example, if a 10-gram item of packaging is made up of four grams of plastic, three grams of aluminium and three grams of cardboard, all 10 grams is plastic packaging for the purposes of the PPT. The comparison must be made against five named substances:

  • wood;
  • glass;
  • paper and board;
  • aluminium; and
  • steel.

In addition, there are two catch-alls: other metals and other substances.

The producer or importer will need to be able to demonstrate to Her Majesty's Revenue and Customs (HMRC) that a packaging component that contains plastic is not subject to the tax. If they cannot demonstrate this, the component will be treated as entirely plastic. Records need to be kept as to the materials used in the manufacturing of the packaging and the weight of each material.

The approach to identifying the proportion of recycled plastic is similar. The proportion of recycled plastic is identified against the overall plastic weight (ignoring any other materials). So, in the same example, if the four grams of plastic used in the packaging is made of one gram of recycled plastic and three grams of virgin plastic, the proportion of recycled plastic would only be 25% and, therefore, the whole 10 grams would be chargeable packaging. Again, if the manufacturer or importer cannot show HMRC that it is more than 30% recycled plastic, it will be treated as non-recycled plastic and subject to the PPT.

Definition of "finished"

A plastic packaging component is chargeable only when it is "finished". A component is finished if it has undergone its last substantial modification, or in cases where the last substantial modification happens when the component is packed or filled, its last substantial modification before being packed or filled.

Any process that changes the shape, thickness, weight or structure of a packaging component is a substantial modification. HMRC gives examples of:

  • extrusion;
  • forming;
  • moulding; and
  • printing.

Modifications that are expressly not treated as substantial include cutting, labelling and sealing. These nuances make it imperative for any manufacturer or importer of plastic packaging products to have clear sight of what their customers are doing with the packaging components. In a simple linear supply chain that might be relatively achievable, but many supply chains are more complex and keeping track of the final substantial modification may be difficult.

The UK business that performs the last substantial modification before the packing or filling process is the one that is liable to pay the PPT. A business that imports plastic packaging components that have already undergone their last substantial modification will also be liable for the PPT.

Four types of packaging component are exempt from the tax, regardless of how much recycled plastic they contain. These are:

  • plastic packaging manufactured or imported for use in the immediate packaging of a medicinal product;
  • components that are permanently designated or set aside for use other than a packaging use;
  • transport packaging used on imported goods; and
  • packaging used as aircraft, ship and rail stores.

A company looking to rely on these exemptions will need to investigate the detail of the legislation and guidance carefully because there are a number of complexities. For example, the medicinal packaging exemption only applies to packaging that actually touches the medicine and the medicine must be for human treatment, not veterinary medicine.

Even if the exemption applies, it is necessary to include the first two types of exempt packaging (human medicine and permanently non-packaging use) in assessing whether the threshold has been exceeded. The second two types (transport packaging on imports and stores packaging) are exempt and not included in the threshold.

Credits and reliefs

Where plastic packaging is intended for export, payment of the tax can be deferred for up to 12 months as long as certain requirements are met. If the packaging is exported within the 12-month period, the liability for the PPT is cancelled.

Where the PPT has been paid and the packaging is subsequently exported or a further substantial modification is made to it, the person who paid the original PPT can claim a credit against other PPT within two years.

Registering for PPT

Manufacturers or importers of plastic packaging components that exceed the 10-tonne threshold must register for PPT. The threshold is measured considering one of two periods:

  • the last 12 months; or
  • the next 30 days.

In the first year of operation (1 April 2022 to 31 March 2023), the look-back period extends only to 1 April 2022, so for businesses close to the threshold of 10 tonnes per year, the obligation to register is likely to become effective only towards the end of 2022.

If the threshold is met, the business must register within 30 days using their government gateway account. Tax is payable from the date the threshold is met.

Due to the fact that recycled plastic and some exempt plastic contributes to the threshold, a business may have to register even if they do not have to pay any tax.

Quarterly returns are required, with the first being due by the end of July 2022, covering the quarter from April 2022 to June 2022.

Supply chain and due diligence considerations

Many questions must be answered to determine whether a business is primarily liable for the PPT. Some of those questions are not about the business itself, however, and relate to suppliers and customers, such as the composition of plastic that is provided to the business or the modifications that customers make to plastic components. In addition, a business can be made secondarily liable or jointly and severally liable for another person's PPT where the business knows or ought to have known that the PPT has not been paid.

Regulations set out the factors that HMRC may take into account when considering whether to make another business secondarily liable or jointly and severally liable for the PPT. These include whether the business has conducted due diligence on the person primarily liable to the PPT.

As a result, it is essential that anyone involved with plastic packaging components (not just importers and manufacturers but also those involved in transporting or storing products and operators of online marketplace or fulfilment businesses) has established appropriate systems for conducting adequate due diligence checks and keeping the correct records.

HMRC has issued guidance on the due diligence required. However, it does not provide a list of checks that must be carried out, only examples of appropriate checks. Each business must decide what checks are relevant, reasonable and proportionate depending on their circumstances. Similarly, HMRC does not stipulate the frequency of checks but recommends every 12 months as a minimum, with checks repeated sooner if the business is made aware of changes in the meantime.

The due diligence mentioned specifically in the legislation is:

  • requiring any information or evidence from the person in the business's supply chain,
  • keeping that information; and
  • assessing the reliability or veracity of the information or evidence provided with reasonable care.

Due diligence on customers, suppliers and other members of the supply chain is therefore an essential part of the PPT compliance, even if it has been concluded that registering to pay the PPT is not relevant.

Examples of checks or due diligence would include:

  • when dealing with suppliers of recycled plastic:
    • checking that they are registered in the United Kingdom as a re-processor or checking with equivalent international accrediting bodies;
    • carrying out, or commissioning from reputable third parties, physical inspections or quality assurance audits to evidence that the plastic supplied is recycled; and
    • if the price paid for recycled plastic is less than the market rate, finding out the reason for the low cost, as this could be an indicator that the plastic is not recycled;
  • tailored contracts with new customers to ensure that the manufacturer can obtain the confirmations and evidence from the customer that the manufacturer needs to claim exemptions and credits, such as:
    • adding a contractual term that the customer is intending to make a substantial modification to the packaging supplied and will account for the PPT on the components;
    • adding a term that the customer confirms that the packaging is used for the immediate packaging of human medicine and will provide evidence to support the claim for exemption such as the licence numbers of the medicines involved; or
    • adding terms obliging customers to provide evidence of export once the packaging has been exported in a timely manner, so that the manufacturer can claim credit;
  • reviewing and renegotiating existing contracts with suppliers and customers to seek to insert appropriate terms along the same lines. There are limited statutory rights to amend contractual terms where the PPT liability changes after the contract is made, but it would still be advisable to renegotiate so that everyone is clear; and
  • when dealing with imports of plastic packaging, non-UK suppliers may be less receptive to providing substantial additional information and, therefore, UK importers may find that they need to conduct additional checks or seek to change supplier if they cannot get comfortable with the position.

Although contractual protection and written confirmations should be obtained, retained and checked, it is important to note that HMRC also expects physical checks to be carried out. Examples could include physically checking the weight of packaging components to their purchase order or visiting a supplier's facility to confirm the veracity of statements made.


When all the above questions have been answered and a conclusion has been reached, it is essential to keep records all of relevant information and activities, so that, if asked, they can be provided to HMRC. This will offer protection from secondary or joint and several liability and/or show that the business has complied with its primary obligations.

As is always the case, where there is non-compliance, HMRC has substantial powers to enforce the adoption of the PPT. It is likely to apply these on a light-touch basis at the beginning while the tax establishes itself. However, businesses should ensure that they are up to speed with the PPT to prevent playing catch-up later.

For further information on this topic please contact Abigail McGregor or Steven Porter at Pinsent Masons by telephone (+44 20 7418 8250) or email (a[email protected] or s[email protected]). The Pinsent Masons website can be accessed at