To tax or not to tax plastic RTP? Making sense of the Plastic Packaging Tax

The UK Plastic Packaging Tax (PPT) came into effect on 1st April 2022 as a means to reduce plastic waste. Companies will be taxed for any packaging containing less than 30% recycled plastic, and the Government hopes this will drive the use of recycled material and eliminate single-use plastic.

While the tax started out with the very best intention, it has grown into something much bigger than anyone could have predicted, and quite frankly, has left many businesses scratching their heads trying to figure it out.

In fact, this confusion started before the tax even became law. Many businesses were unsure about how the tax would affect them, while in a survey conducted by Valpak, over three quarters (77%) of British businesses were unaware of the new tax altogether.

Even four months into the tax, there is still confusion and plenty of question marks as to what is in the scope of the tax, and whether certain products subject to the tax should be included in the first place.

By the Government’s definition Plastic Packaging Tax applies to plastic packaging, predominantly plastics by weight, manufactured in or imported into the UK, that contains less than 30% recycled plastic.

That means items such as plastic bottles designed for single use (even if they can be refilled and reused), plant pots designed to be sold with plants inside, and reusable plastic crates designed to deliver fresh fruit or baked goods, will be subject to the tax.

Items that are excluded from the tax must fall into three ‘types’ and are designed to be:
- used in the long-term storage of goods
- an integral part of the goods
- reused for the presentation of goods

Examples of these products include toolboxes, first aid boxes, glasses cases, and earphone cases.

But it is at this point that the line between ‘what is’ and ‘what isn’t’ included becomes blurred and contradictions appear.

Let’s take our 1,400-litre GoPalletBox 1311S 3R Blue plastic container, for example.

Based on the Government’s guidance, it is ludicrous how this giant GoPalletBox is subject to the tax because any products used for long-term storage of goods should be exempt – whether it is made from 30% recycled plastic or not.

The key feature of this solid plastic pallet box is that it is reusable. It is in no way, shape or form ‘single-use’. It is incredibly strong, offers the perfect solution for bulk handling, and has good-hygienic properties. One of our food manufacturing clients utilises this box to store various dry goods and food ingredients, prior to mixing and packing, within a highly automated facility. The client can use the box repeatedly, wash it when required to maintain hygiene, and the box can be fully recycled when it comes to the end of its long working life.

By using this box, it eliminates the need for any additional plastic packaging that would otherwise have to be thrown away. If you consider this over the entire 10-year lifespan (often longer) of the product and how many times it will be used, think how much plastic packaging it could help you save!

But despite its longevity, reusability, and recyclability, and use for long-term storage, this box would still be subject to Plastic Packaging Tax, because it is used in "the supply chain".

Confused? So are we!

When we came to completing our first declaration, we were greeted with the biggest contradiction we have seen to date.

plastic packaging tax

We were required to state the weight of all the plastic packaging we have imported, but it says "Do not include plastic packaging which is used in long-term storage. So, really, which is it?

In our correspondence with HMRC, they agree that our GoPalletBox is used for long-term storage, but because storage takes place within a supply chain, it is subject to tax.

This is the ludicrous part and what we believe to be a contradiction and not at all in line with the original concept.

Organisations such as ours are being taxed for providing solutions that can reduce plastic packaging waste, and it seems this is because these forms of plastic RTP are being used in the supply chain.

We wondered if we were the only ones who thought it was crazy that this giant box was in the scope of the Plastic Packaging Tax?

So, we put it to our LinkedIn followers. We asked whether they thought this box would be subject to Plastic Packaging Tax.

38% of the respondents said it was a great product, while the other 62% all agreed that this box should not be included in the Plastic Packaging Tax.

One person said, “I would like to think not as it’s reusable.”. Another person disagrees that this should be in scope for PPT and said, “[These] products are designed with longevity in mind and are fully recyclable. To be taxed against something that promotes a circular economy, which we all want to see, is another example of a poor understanding of our industry.”

Another respondent suggested that RTP wasn’t considered when the Bill was drawn up. They said, “Clearly this and many other products shouldn't fall into the category of a plastic tax and are proven to be a more sustainable solution… how you can categorise this alongside single-­use plastic baffles me.”

Finally, another follower still wasn’t’ sure and said, “[We] still have no crystal-clear answers. While we understand the need to drive down single-use plastic waste, reusable plastic products are different solutions completely. And what will the tax revenue be spent on I wonder?”

But unfortunately, these comments don’t change the scope of the tax.

So, what’s next?

After one full year of data, the Government has said it will review the tax. There is speculation that the minimum amount of recycled plastic materials in each product will increase from 30%, likewise the taxable rate could increase from £200 per tonne.

While we will carry on making our returns and Plastic Packaging Tax payments to HMRC, we will continue to argue that many of our products should actually be exempt from the tax. They are clearly used in long-term storage and are helping to reduce the use of single use plastic.

We will also continue to work closely with our manufacturing partners to develop more products made from recycled material and, where we can, increase the amount of recycled content in our products.

As ever, we will remain committed to taking responsibility for all the plastic pallets and boxes we supply by recycling them through our pioneering recycling scheme. We will continue to provide our customers with expert advice and match the perfect product to their application, and we will champion the sustainable benefits of recycled plastic pallets and help our customers embrace a plastic circular economy.

If you are carrying out due diligence checks and require our PPT Registration number, you can find it here XDPPT00000015.

Please feel free to get in touch with any questions you might have about PPT, and one of our experts will be able to help 01323 744057 or emailing [email protected]