Tax on plastic packaging with less than 30% recyclate
A new national tax on all plastic packaging that does not include at least 30% recycled content is coming into force in the UK in April 2022.
Announced by Chancellor of the Exchequer Philip Hammond as part of his 2018 budget presentation, the tax will work alongside a reformed packaging producer responsibility system (PPRS), which will aim to make businesses more responsible for the clean-up and recycling costs of their packaging.
Plans for the new PPRS system are focused on encouraging the design and use of plastic packaging that is easier to recycle.
The current low cost of virgin packaging materials does not encourage the use of recyclate. At the moment around 2.26 million metric tons of plastic packaging are used in the UK each year.
With this new law, demand for recyclate will increase, which should stimulate new investment in plastic recycling innovation and capacity, which will be necessary as recyclate viability is already proving difficult to increase due to the challenging nature of collection.
In the short to medium term, the cost of packaging will probably increase for the already pricey recyclate as demand will go up and outstrip supply.
The new law will not come into effect until 2022 with the timing chosen to give businesses time to adjust their behaviour and manage any additional costs they will face.
According to Hammond, future revenues from the packaging tax and packaging producer responsibility reforms will go towards investments to address single-use plastics, waste and litter.
“The tax will provide a clear economic incentive for businesses to use recycled material in the production of packaging, which in turn will create greater demand for this material,” said Hammond.
Hammond claimed his new policy would “transform the economics of sustainable packaging”, and said the government would consult on the details and timetable of implementation.
In 2015 the government added a 5p charge to plastic bags, a move that appears to have cut plastic bag sales by 86% and seen fewer entering the environment.
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