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Plastic Packaging Tax: Make calculating and paying your return easier

Posted by Rowan Gill on May 9th 2023

The UK’s Plastic Packaging Tax (PPT) came into force on 1 April 2022 and is estimated to have generated more than £260 million for the UK Government in its first 12 months. From a revenue-generating perspective, it’s undoubtedly been a success for the government. But for the thousands of businesses now tasked with gathering data, calculating liability and submitting a quarterly return, it’s become something of an administrative burden.

We look at the documentation, accounts and evidence businesses need to gather to support their PPT returns, and suggest how a new app could make it much easier for businesses to meet their packaging tax obligations…

Which businesses have to register for PPT? 

Any business that imports or manufactures 10 or more tonnes of plastic packaging is obliged to register with HMRC for PPT. This applies to all types of plastic packaging, including bottles, mailing bags and pallet wrap. If any of that packaging contains less than 30% of recycled plastic, tax will be charged on those items at a rate of £210.82 per tonne. 

How many businesses does PPT affect? 

Initial government estimations were that 20,000 businesses could be impacted by the introduction of the Plastic Packaging Tax. While the actual number of businesses registering for PPT has been much lower (3,559 by February 2023), there are still a lot of businesses that face the challenge of gathering information and evidence about their packaging, and submitting quarterly returns to the government.

What makes PPT so difficult for businesses to manage? 

There’s a lot of data businesses need to gather from multiple sources, and this can make calculating PPT liability and submitting a return difficult. Perhaps one of the biggest barriers for businesses is trying to ascertain the make-up of the packaging they use – this information is not always included in product brochures, and sometimes even suppliers don’t know what percentage of the material is recycled. This can mean businesses have to trace back to the manufacturer to get the information they need, as well as collecting further information about weight, exemptions and other variables.

The quarterly returns are something else businesses can find challenging – PPT has effectively become an ongoing administration task, which businesses need to carry out diligently.

What accounts and records do businesses need to keep? 

The UK Government’s online Plastic Packaging Tax Guidance contains detailed information about exactly which accounts, records and evidence businesses need to collect, as well as details about how records should be organised and stored. 

Among the accounts that need to be submitted as part of the PPT quarterly returns are: 

  • A breakdown of the weight of plastic packaging components manufactured or imported in each period, with the weight given in tonnes, kilograms and grams, and evidence of how each entry has been worked out 
  • The weight of plastic packaging exported  
  • The weight of any plastic packaging businesses want to claim a credit for, for example if the packaging has been exported or converted into new packaging components 

Alongside those accounts, businesses need to document evidence of any exemptions to the tax in respect of the more-than-30% recycled rule. 

To claim exemptions on this basis, businesses need to gather and keep records that give clear evidence that recycled plastic has been used. This includes:  

  • Showing how you’ve worked out the percentage of recycled plastic 
  • Providing evidence that recycled plastic was used 
  • Showing which component of the packaging the percentage relates to, including product lines and/or production runs 
  • Confirmation of the source of the recycled plastic 

Further details can be found on the UK Government website. 

What evidence do businesses need to gather?

As with any tax liability, gathering evidence to support a PPT return is essential for ensuring businesses are paying the right amount of tax and aren’t breaking any laws. Among the documents businesses need to keep are:

  • Product specifications
  • Contracts
  • Production certificates and certificates of conformity
  • Accreditations
  • Quality assurance audits
  • Sales and purchase invoices
  • Export documents

How can businesses make PPT returns easier? 

There’s no denying that the introduction of PPT has become an administrative headache for many businesses. Gathering the right evidence, doing the right calculations and then submitting a quarterly return takes a lot of time and effort, and many businesses simply don’t have those to spare. 

To make PPT easier to manage, it’s important for businesses to do two things: 

  1. To understand the rules, and where their liabilities may lie; and 
  2. To implement a system that allows them to track and record packaging data in real time, to alleviate the burden of gathering evidence at the end of each quarter 

Track and report your PPT liability easily 

At BCN, our expert team of developers have created the Evo-soft Waste Packaging & Plastic Packaging Tax app to make PPT data capturing and reporting quick and easy.  

Built for use within the Dynamics 365 Business Central solution, the app streamlines the process of tracking and gathering all the data you need for your PPT returns, including the use of packaging materials within your items, weights across items, and a breakdown of plastic types and recycled content. With simple-to-configure datasets, and all your important information instantly available and easy to see, it makes submitting your quarterly Plastic Packaging Tax a relatively painless process. 

It’s available on the Microsoft AppSource to download today.

Find out more about how BCN can help streamline your operations with custom and out-of-the-box application development services built on Microsoft 365 Business Central.