The tax, currently charged at around £210 per tonne, has been in force since April 2022 and is levied on manufacturers and importers of plastic packaging containing less than 30% recycled content.
HMRC statistics, published on 17 August, show that in the financial year 2022-2023 the tax collected £276 million - £41 million more than the £235 million originally forecasted by Treasury.
The figures reveal that 4,142 businesses registered in the first financial year of the tax. However, of the total plastic packaging manufactured or imported into the UK, however, only 39% of it was declared as taxable, which may indicate a degree of non-compliance or lack of awareness, despite some types of packaging being exempted or excluded from the tax design.
Treasury have also predicted that tax collection would fall to £210 million by the end of 2026, as the policy intention to increase the use of recycled material starts to become visible. The £41 million discrepancy between predicted and actual revenue in the first full year of the tax however may suggest businesses are simply absorbing the cost, and not looking to increase their use of recycled content. This may in part be due to the noted lack of recycled material on the UK market.
Is the tax reinvested into the recycling industry?
Industry has long criticised that monies raised from the tax is not ‘hypothecated’ or ringfenced and reinvested into the UK recycling industry, and instead goes into general spending. When asked recently whether this is something that should be reconsidered Mark Palmer, senior policy advisor at HMRC, said “this is an interesting idea. All I can really say is that it is a political question for Treasury. From an HMRC point of view our responsibility is collecting the tax, how the money is used is beyond our view.
“I do think it is an interesting an idea and I think any suggestions of that sort would be worth putting to Treasury and I would encourage people to share them. But, it is not something I can directly give any promises on.”
This might be especially pertinent given the recent release of the consultation chemical plastic recycling and mass balance in relation to the tax. If government do want to see increases in the UK plastic recycling, and the use of secondary material in manufacturing, then ensuring direct investment into the industry would certainly help in achieving it.
Are you impacted by the tax?
If you manufacture or import 10 tonnes or more of plastic packaging over a 12-month period from April 2022, you will need to register for the plastic packaging tax. Visit our website for more information on if your business will need to register, and how you may be impacted.
As Policy advisor Louisa provides key support to our team, including preparing reports on environmental policy issues and maintaining awareness of new developments. As such she will often be found coordinating responses to policy consultations, advocating policy positions and providing internal guidance to current legislation.