Has The UK Government Taken The Right Approach With Its New Tax On Plastic Packaging?

A preoccupation of many a company working alongside a chartered tax adviser in South West Englandat the moment, is the UK’s new plastic packaging tax, or PPT. The new tax takes effect from 1st April, and will involve plastic packaging that is manufactured in or imported into the UK being charged at a rate of £200 per tonne, if the plastic in question is less than 30% recycled.

The levy was first announced in the 2018 Budget by then-Chancellor of the Exchequer, Philip Hammond, and was conceived with the aim of giving businesses incentives to use a greater amount of recycled material in their plastic packaging.

However, according to the Financial Times, food manufacturers have criticised the environmental tax’s implementation, claiming that it will force them to bump up costs and risk adding to already-acute inflationary pressures.

What have food companies and industry figures been saying about the tax?

The newspaper reported that it had heard from multiple large food firms and representatives of the industry, claiming that businesses were encountering challenges in their efforts to understand and comply with the plastics packaging tax.

Food manufacturers reportedly pointed out that the Government had not put in place any exemptions from the tax for materials that come into contact with food and are unable to be recycled. As a consequence, these firms said they were forced to pay the tax – meaning they had to deal with heightened costs that they would potentially have to pass on.

Sustainability director at the Food and Drink Federation (FDF), Nicki Hunt, was quoted as saying: “Food and drinks manufacturers want to do the right thing and recycle more packaging – in line with the UK Government’s and our own environmental targets – but efforts are being constrained by restrictions around materials that can have contact with food, which cannot currently be recycled, and are subject to the new plastics packaging tax.”

She said that this had the effect of placing additional costs on businesses, thereby also bringing the risk of higher prices for customers. She stated that the industry favoured the government taking action to “further support and incentivise innovation in recyclable packaging materials.”

The newspaper also cited a “large company source” as claiming that the manner of the tax’s implementation was “hugely contradictory as there would be no incentive to use recycled content – the very aim of the plastic tax.”

How has the Government responded to the food sector’s criticism?

According to the Financial Times story, the Government said it had worked closely with industry – including the food packaging sector – to “ensure businesses were getting the information they need”.

It explained that it had minimised exemptions to the tax as a means of encouraging greater use of recycled plastic and stimulating the supply chain for recycled plastic.

The Government further said: “Food packaging makes up around 40% of packaging in the UK so excluding it from the tax would severely blunt its impact. Many types of food packaging already include recycled plastic or use alternative materials to plastic.”

Whether or not your own business will be directly or indirectly impacted by the introduction of the PPT, you are sure to appreciate the assistance and knowhow that will help you to better manage your own organisation’s tax affairs. This is precisely what a well-qualified and experienced chartered tax adviser in South West England from TS Partners can provide.

Enquire to our team in Wellington, Newton Abbot or Plymouth today, and we will be pleased to talk to you about how our accounting and tax-related services and solutions could help your organisation.

 

 

Posted in Business blogs on May 20 at 09:08 AM

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