On 12 November 2020 the UK issued for consultation draft legislation to introduce a plastic packaging tax. The legislation when finalised would be included in the Finance Bill 2021 and the tax would be implemented from April 2022.

The tax would apply to plastic packaging produced in, or imported into, the UK, that does not contain at least 30% recycled plastic. Plastic packaging is defined as packaging that is predominantly plastic by weight; and recycled plastic is defined as recovered plastic that has been reprocessed by a chemical or manufacturing process, and can then be used for its original purpose or for other purposes.

The tax would not apply to any plastic packaging which contains at least 30% recycled plastic, or to any packaging which is not predominantly plastic by weight. Imported plastic packaging will be liable to the tax.

There will be an exemption for producers and importers of small amounts of plastic packaging to mitigate against disproportionate administrative burdens in comparison to the tax liability.

The tax is intended to provide an incentive for businesses to use recycled material in the production of plastic packaging, leading to greater demand for this material and encouraging increased recycling and collection of plastic waste, diverting it away from landfill or incineration.

The draft legislation includes a GBP 200 per tonne tax rate for packaging with less than 30% recycled plastic. The registration threshold for the tax is 10 tonnes of plastic packaging produced in or imported into the UK per annum. The scope of the tax would be defined by the type of taxable product and recycled content. An exemption would be available for producers and importers of small quantities of plastic packaging.

The draft legislation also covers provisions for registration and liability for the tax; collection, recovery and enforcement; and relief from tax on exports.