Plastic packaging tax | Unanswered questions

Zoe Brimelow, brand director at packaging manufacturer DUO, believes it’s time for the Government to provide more specific answers about the plastic packaging tax.

As recently reported by Circular, a cross-party Committee inquiry about plastic waste has just closed. The House of Commons Environment, Food and Rural Affairs (Efra) Committee invited views about how Government is tackling targets to eliminate all ‘avoidable’ plastic waste by 2042.

This seeks answers to many relevant questions, which consider the effectiveness of Government measures including whether the plastic packaging tax is sufficient.

Whilst the effectiveness of the forthcoming tax should be debated, there are many outstanding questions and information gaps that Government must answer first, if we’re to draw reasonable conclusions about perceived impact.

With less than seven months until the new tax is introduced on 1 April 2022, there’s still a lack of clarity about exactly what will be required of affected businesses.

Since the plastic packaging tax was announced during the 2018 Budget, it has gone through various stages of consultation. And now, with less than seven months until the new tax is introduced on 1st April 2022, there’s still a lack of clarity about exactly what will be required of affected businesses.

The policy paper ‘Introduction of Plastic Packaging Tax from April 2022’ can be viewed on the Government’s website and was last updated on 20 July 2021. This includes a ‘detailed proposal’ but it’s still unclear how businesses will actually submit plastic packaging tax returns. There’s also no information about when the online tax portal for company registrations will open.

Government has previously asked businesses questions about the policy design of the tax and a summary of responses published in November 2020 acknowledges that companies still require further information about registration, returns and enforcement.

Clear guidance must now be forthcoming from Government to enable businesses to properly prepare auditing and day-to-day working practices in consultation with their own supply chain partners ahead of 1 April next year.

Tax exempt

Concerns were also raised by businesses during the policy design consultation about their obligations to verify the amount of recycled plastic in imported plastic packaging. There is, unfortunately, a realistic possibility of companies wrongly declaring themselves tax exempt.

They may well believe imported plastic packaging meets the threshold of containing at least 30% recycled plastic, when this is not the case. In such instances, inaccurate tax returns would see businesses hit with penalties or having to spend further time and resource proving they’d acted with genuine intentions, which may be extremely difficult to evidence.

Government has indicated that businesses importing plastic packaging should adhere to the same controls for tax purposes as packaging manufactured in the UK. This is not entirely possible due to the extended nature of supply chains stretching across multiple countries.

Sadly, it’s rather easy for scrupulous operators to manipulate long chains of supply to mislead businesses when it comes to the composition of packaging.

There’s also the consideration that international travel restricted by Covid makes it more challenging and expensive for British-based businesses to regularly visit and inspect sources of supply abroad. If Government is placing onus on importers to ensure compliance with the new tax regime, it should also offer clear guidance about how to exert due diligence to achieve this.

This existing lack of clarity could impede the implementation of the new tax regime, already throwing into doubt its proposed sufficiency. However, perhaps of greatest note when questioning the effectiveness of Government measures for addressing plastic waste, is how will plastic packaging tax revenues contribute towards longer-term targets?


Government figures indicate that the plastic packaging tax is expected to generate £235 million in revenues in its first year from 2022 to 2023. It seems likely that a proportion of this tax revenue will go towards covering one-off capital expenses and staffing costs incurred via the new system, which could be up to £42m. This would leave approximately £193m remaining from first year tax revenues. There is no information in the latest policy paper to show how this money will be spent.

The reinvestment of tax revenues could prove the difference between how sufficient or ineffective the plastic packaging tax is in helping achieve the Government’s 2042 target of eliminating ‘avoidable’ plastic waste.

There is no information in the latest policy paper to show how this money will be spent.

Plastic packaging taxes could fund research and development to support more businesses in making the transition to packaging containing higher levels of recycled polymer content. Or revenues could finance grants to help companies invest in closed loop recycling systems. This concept involves recreating a product, such as packaging, indefinitely, to reduce the reliance on resources and minimise waste.

To realise this, it’s imperative that materials such as Low-Density Polyethylene (LDPE) are recycled in insolation to reduce damage to the virgin material. Essentially, this allows recycling, recreation and reuse without the packaging losing its properties and performance capabilities during the process.

Admittedly, any of these options would require expenditure on creating and managing schemes and developing new infrastructure. Perhaps this is worthy of consideration in line with expectations that the plastic packaging tax will generate up to £905m by 2026.

How this sizable and newly available tax revenue is utilised will surely determine just how sufficient the measure is in achieving Government targets and ambitions of reducing waste and moving towards a circular economy.

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