Plastic tax in 2022 – what should you be doing to prepare?

Base of blue water bottle with word RPET written in capital letters, indicating recycled plastic, against white background

Plastic tax – what and why?

Forecasted to increase the use of recycled plastic by 40%, the much anticipate plastic tax is intended to encourage the use of recycled plastic within packaging especially in the food supply chain. This would reduce the amount of virgin plastic used. In turn this would lead to an increase in the collection of plastic waste and recycling activity, ultimately leading to a decrease in the levels of plastic being incinerated or going to landfill and so reducing carbon emissions.  

It is estimated that 20,000 manufacturers and importers of plastic packaging will be impacted by the introduction of the tax. Applicable to any business manufacturing or importing ten or more tonnes of plastic packaging over a period of twelve months, the tax is applied at £200 per tonne on plastic packaging components that contain less than 30% recycled plastic.

With the tax applying to any plastic component used to contain, protect or present goods, the majority of businesses within packaging manufacturing, consumer goods, chemical, the food supply chain, including drinks, and industrial manufacturing will be affected. Exemptions include packaging in licensed medicines, packaging used as stores on planes, ships and trains for international journeys, additional packaging such as pallet wrap and long-term or repeat storage items such as plastic boxes. There is no exemption on food packaging. Single use packaging products that are used to contain any commodities or waste are also subject to the tax, including plastic bags, refuse sacks, nappy sacks and disposable cups.

Applying to finished plastic packaging components, the tax includes both unfilled and filled packaging such as drinks bottles. If the finished packaging is mixed materials, then it will be subject to the tax if the weight of the plastic components is higher than the weight of the other materials. With the tax covering so many sectors, the hope is that all businesses and manufacturers will be encouraged to assess and explore alternative packaging solutions, making it easier for consumers to recycle at the same time as mitigating the tax.


Reviewing alternatives

As food procurement specialists, we are aware that in preparation for the tax, manufacturers will be reviewing alternative packaging solutions to reduce the use of single use plastic and meet the threshold of 30% recycled plastic. PET (polyethylene terephthalate) is usually used for drinks bottles and chilled or ambient products such as salads or takeaway foods due to its high barrier properties. However, it does fall within scope of the plastic tax. A suitable replacement might be rPET which would meet the plastic content threshold, or bagasse. Made from pulped plant mass this is compostable and can be recycled through paper waste streams. However, whilst flexible films also fall within scope of the tax, those that are in direct contact with food are more difficult to substitute as recycled content is not permitted for food grade films and bags. Paper bags may be used for takeaway or short shelf-life products but will not be suitable for many products. There is potential for manufacturers to ensure that non-food containers are meeting the 30% recycled plastic minimum to eliminate the plastic tax on these goods.


Food supply chain challenges

As we have seen over the past months, the supply of packaging materials has been a challenging market with raw materials being in short supply and seeing price increases. In fact, this is true of the food supply chain as a whole. As Mintec, reports, demand for cartonboard has seen prices increase over the past few months, with the pandemic driving sales in e-commerce and the consumer sectors. Made from recovered paper, virgin pulp or a mixture of both, cartonboard is used to make boxes that can be used in the packaging of dry and frozen foods, ready meals, dairy, confectionery, baked products and health care. PLA has also been in short supply with increased plastic prices. The Mintec Category Index for global packaging shows a 68% increase in prices versus last year and an increase of 35% since January 2021. With demand exceeding supply, packing materials – especially disposable food packaging – are seeing reduced availability and increased lead times combined with cost increases on shipping and freight for imported goods.

Businesses will incur several one-off cost implications as a result of the plastic packaging tax. Ahead of April 2022, manufacturers and importers will need to carry out training to ensure their business is familiar in adhering to the new rules. Food procurement standards frameworks will reflect this. They will need to register with HMRC and implement the correct reporting framework. The evaluation of which components are applicable for tax relies heavily on the documentation and reporting of purchased materials and so businesses must keep adequate records, increasing administrative costs. They will also face any penalties for failing to comply with the guidelines and of course they must pay the resulting plastic packaging tax.

Whilst the purpose of the tax is to increase the use of recycled plastics in the UK and ultimately reduce the amount of single use plastic going into landfill, this does depend on having the right recycling points in place. Consumers will rely on manufacturers having clear recycling instructions on all packaging and food services will need to ensure that there are sufficient waste streams to cover the materials for recycling.


Expert food procurement insight

Rising prices, extended lead times and the new plastic packaging tax all contribute to the challenges faced by the food supply into the new year. With a multitude of packaging factors impacting on cost, food procurement analysis and insight tells us that we can expect fluctuations in price across various product categories. The balance of supply and demand could well level out and help to alleviate pressure, however the introduction of the tax from 1 April 2022 will undoubtedly have an impact. Yet despite the challenges, we mustn’t lose sight of the bigger picture in working together to achieve a more sustainable supply chain and maintain the health of our planet.


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