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Plastic Tax update from HMRC & consultation release

22nd July 2021

Martin Hyde

On Tuesday 20 July (ironically during a live webinar we were hosting that covered the Plastic Tax), HMRC published a range of regulation updates and consultations relating to ongoing and upcoming policy measures. This included an update on the Plastic Packaging Tax, covering several potential changes and opening a technical consultation on the secondary draft of the regulations

The consultation

The technical consultation will run up until the 17th of August and is an opportunity for stakeholders to feedback specific technical issues generated by the draft regulations. Unlike standard stakeholder consultations, there is no questionnaire or list of queries to answer, instead stakeholders are invited to highlight specific issues with the policy measure so far.

The full consultation details can be viewed on the government website HERE

You views and online webinar events

Comply Direct will be responding directly to the consultation and will include all unanswered queries we have received by the closing date relating to the draft tax policy. To enable this consultation to be as successful as possible, we need our members’ support in highlighting and clarifying areas of concern, confusion and issue with the tax.

Although the consultation turnaround is short, being less than a month, we are planning to host two separate online sessions covering the latest update:

  1. Webinar – Overview of the tax so far, what has changed? Thursday 29 July at 2pmregister your free place here
  2. Roundtable discussion - Covering specific queries and opportunity to feed directly into the consultation. Wednesday 11 August at 10amregister your free place here

Key changes highlighted within the most recent HMRC update

Full information from HMRC can be found here, however, we have summarised the key changes presented in the most recent update below. For a summary of the policy as a whole, please follow this link to the recording of our most recent Plastic Tax Webinar HERE. Overall, there are three key areas of adjustment under HMRC’s update:

“Finished” components

HMRC have previously stated that the tax is payable at the point at which a piece of packaging becomes a “finished component”. This is an area that was in need of further guidance due to the uncertainty around packaging manufactured in multiple stages.

Government have confirmed that processes that change the shape, thickness, weight or structure of a packaging component would be considered to be substantial modification, and therefore, the tax would not apply until after this point in the manufacturing process. Specific examples given are extrusion, moulding, forming, laminating or printing.

There are however, several processes that are not considered to be substantial modifications - these include:

  • Blowing or forming a preform
  • Cutting
  • Sealing
  • Labelling

Plastic component types removed

HMRC have also clarified three additional types of plastic packaging component that would not be liable under the tax. The key theme here appears to be minimising the impact on long term, reusable storage mediums made of plastic.

  • Products that are designed to both be:
    1. Filled at point of sale to a consumer or user
    2. Where the packaging function is secondary to the storage function (e.g. power tool boxes)
  • Products designed for re-use for the presentation of goods
  • Products designed for re-use for the presentation of goods for a consumer or user, where they have been specifically allocated or set aside for this purpose (e.g. display units / storage shelves)

Why are these components being removed?

HMRC’s aim here is to target the tax at single use plastic components or those likely to be used in a single use environment. As a result, the government has changed stance slightly here to minimise the impact on long term storage packaging such as toolboxes.

Meaning of a packaging component

HMRC have updated their definition of a packaging component to clarify the identification of liable packaging components:

Packaging Components are defined as:

“a product that is designed to be suitable, whether alone or in combination with other products;

  1. For single use (even if capable of being used more than once)

And

  1. For use by a consumer in the containment, protection, handling, delivery, or presentation of
    1. Any commodity
    2. Waste

Next steps

The technical consultation closes on the 17th of August. As this is a technical consultation, it relies on active engagement from stakeholders who have identified issues or loopholes in the policy in need of support.

We hope that you will be able to join us on our upcoming webinars, but should you wish for any additional support on the plastic tax or have specific questions, please do get in touch with consultation@complydirect.com