Plastic packaging tax is working - receipts fall 6% since last year
Plastic packaging tax is working - receipts fall 6% since last year
New figures released today show that Plastic Packaging Tax (PPT) receipts collected by HMRC between 2023-24 has decreased by 6% compared to the previous year, totalling £285m - matching the increase in plastic packaging that meets the 30% recycled content test.
The number of companies registered to pay the tax rose very slightly by 527, now standing at 4669.
The tax was announced in the Budget in 2018 and officially introduced in April 2022, making this the first year the statistics could be compared. The tax applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic.
Those whose packaging contains the 30% recycled plastic content are exempt but must still register with HMRC and prove the 30% threshold has been met.
Chris Morgan, Tax Director at BDO said:
“This is still a fairly new tax, with many businesses still getting their heads around the details. Many businesses who technically fall into the net will be overseas entities, importing goods into the UK and there is a chance that the very small increase of just 527 companies registered to pay the tax means some are falling through HMRC’s net. The fact that there has been a 22% fall in plastic packaging imported into the UK may indicate that importers are switching to other packaging to reduce their exposure to PPT.
“The 6% decrease in the value of receipts collected is likely a result of several factors.
More businesses are investing in their supply chains to ensure their packaging meets the 30% minimum recycled materials threshold or ensuring they can prove this to HMRC. However, it’s worth remembering that the PPT charged per tonne of plastic has increased by inflation, so without that, the decrease in revenue would likely be significantly higher.
“We can see from these stats that the actual tonnage of taxable plastic packaging has decreased by around 12%, but the tonnage declared with 30% or more recycled plastic, has increased by 6%.
“While this is a good start, looking ahead, the new Labour Government will want to ensure they keep up the pressure on businesses using plastic packaging. As well as increasing the charge each year, this may involve trying to ensure more overseas businesses are aware of the tax and informed of their obligations to register, even if they are exempt. There is also a strong chance that the government will impose incremental increases to the 30% recycled plastic threshold, putting further pressure on businesses reduce the use of virgin plastic.
ENDS
The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
frank.x.shepherd@bdo.co.uk
07812 463601
The number of companies registered to pay the tax rose very slightly by 527, now standing at 4669.
The tax was announced in the Budget in 2018 and officially introduced in April 2022, making this the first year the statistics could be compared. The tax applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic.
Those whose packaging contains the 30% recycled plastic content are exempt but must still register with HMRC and prove the 30% threshold has been met.
Chris Morgan, Tax Director at BDO said:
“This is still a fairly new tax, with many businesses still getting their heads around the details. Many businesses who technically fall into the net will be overseas entities, importing goods into the UK and there is a chance that the very small increase of just 527 companies registered to pay the tax means some are falling through HMRC’s net. The fact that there has been a 22% fall in plastic packaging imported into the UK may indicate that importers are switching to other packaging to reduce their exposure to PPT.
“The 6% decrease in the value of receipts collected is likely a result of several factors.
More businesses are investing in their supply chains to ensure their packaging meets the 30% minimum recycled materials threshold or ensuring they can prove this to HMRC. However, it’s worth remembering that the PPT charged per tonne of plastic has increased by inflation, so without that, the decrease in revenue would likely be significantly higher.
“We can see from these stats that the actual tonnage of taxable plastic packaging has decreased by around 12%, but the tonnage declared with 30% or more recycled plastic, has increased by 6%.
“While this is a good start, looking ahead, the new Labour Government will want to ensure they keep up the pressure on businesses using plastic packaging. As well as increasing the charge each year, this may involve trying to ensure more overseas businesses are aware of the tax and informed of their obligations to register, even if they are exempt. There is also a strong chance that the government will impose incremental increases to the 30% recycled plastic threshold, putting further pressure on businesses reduce the use of virgin plastic.
ENDS
Note to editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
Contacts
Frank Shepherdfrank.x.shepherd@bdo.co.uk
07812 463601