As announced in the 2018 Budget, from April 2022, the government intends to introduce a new tax on the production and import of plastic packaging with less than 30% recycled content.
The Government’s call for evidence last year highlighted that using recycled plastic is often more expensive than using new plastic, despite its lower environmental impacts. The Government has stated that it wants to shift the economic incentives involved in the production of more sustainable plastic packaging, encouraging greater use of recycled plastic and helping to reduce plastic waste, and this would complement the existing proposals for reformed Packaging Producer Responsibility regulations.
In a consultation launched on 18 February 2019, the Government has now outlined its proposal for how the tax will work. It is proposed that the tax would apply to all plastic packaging manufactured in the UK and unfilled plastic packaging imported into the UK, and that it would only apply to plastic packaging with less than 30% recycled content. The definition of plastic packaging for the specific purposes of applying the tax would be set out in legislation.
The consultation asks a number of specific questions such as how the products within the scope of the tax should be defined. The deadline for responses to this consultation is 12 May 2019.
More details of the consultation and a link/ email/ address by which you can respond to the consultation can be found here.
This tax is particularly likely to apply to businesses who operate in the food & drink / agri-business space.
Businesses who are affected may now be looking at innovative ways of changing their approach to packaging – if you are, this is something that might indicate a possible R&D claim on associated expenditure.
If you have any questions on the R&D claim process, please do not hesitate to contact your client manager or partner or speak to one of our Innovation & Technology Tax Specialists.