ENVIRONMENTAL compliance specialist Ecoveritas is warning firms to double check their plastic packaging tax (PPT) obligations after chancellor Jeremy Hunt confirmed the levy would rise in line with the consumer price index (CPI) at the start of the next financial year.
A rate increase of more than £7 means the tax will be charged at £217.85 per tonne of in-scope plastic packaging manufactured or imported into the UK from 1 April 2024. The existing rate of £210.83 will remain in place until that date.
Ecoveritas added that HMRC’s announcement of the tax increase also hinted that further changes could be on the way, in the form of further rate hikes and an increase in the minimum recycled content threshold. Currently, plastic packaging made from at least 30% post-consumer recycled content is exempt from the tax, so increasing this threshold would drag more plastic packaging into scope.
“While many businesses will have noted the headline-grabbing tax cuts in the Autumn Statement, it’s important not to overlook the increase in the PPT rate,” said Andrew McCaffery, chief strategy officer at Ecoveritas. “Many businesses appear to have simply chose to pay the tax when it was first introduced at a rate of £200 per tonne in 2022. This is borne out by the fact that HMRC took £41m more than it had forecast between April 2022 and March 2023.
“In April, the rate will be substantially higher than it was when it was first introduced. We would advise any businesses thinking of paying the tax again next year to check, check, and check again when it comes to their PPT obligations – not only will this ensure they do not overpay, but they may also find that switching to plastic-free or recycled plastic is a more viable option now.”
An HMRC statement said that ‘Increasing the rate of PPT in line with CPI maintains the real terms value of the price incentive to use recycled plastic and supports the government’s environmental goals.’
Andrew McCaffery added, “Less than two years after its introduction, the PPT rate has already jumped sharply, proving that this is a constantly shifting situation where your obligations can change at very short notice.”