Plastic packaging in scope

Definition of ‘packaging’

To count as a plastic packaging component, the component must be both packaging and plastic as defined by the regulation. The presence of any recycled content is irrelevant to the definitions. We will first look at the definition of ‘packaging’. Packaging is used to contain, protect, handle, present or deliver goods.

The two forms of packaging that are in scope are
a) packaging intended for use within the supply chain and
b) packaging intended for single use by the consumer. For example, a ready meal container.

Packaging that’s deemed an integral part of the goods themselves is exempt from the tax. HMRC has given various examples of when packaging would and would not be considered integral to the goods themselves.

Damaged packaging is subject to the tax. However, wastage produced in ancillary processes completed by UK manufacturers of plastic packaging is not – although the Government has said that it will do all it can to discourage wasteful practices.

Examples of packaging in scope for seafood businesses: 

• Plastic sheets that are used in frozen cartons of shatterpack fillets protect goods and are intended for single use by the consumer, so they’re packaging components that are in scope.
• Importers of surimi seafood sticks will have to assess and quantify plastic volumes within their imports of this product, where those plastic volumes contain and/or protect the goods and are therefore packaging. This is the case unless the importer deems those plastic volumes to be an ‘integral part of the goods’, the definition of which has been provided by HMRC.

Transport packaging on imported seafood:

• The tax does not apply to transportation packaging on goods imported into the UK – such as pallet wrap, and reusable plastic fish crates that are being used to transport multiple sales units and prevent damage during transportation.
     o Fish boxes imported into the UK are in scope, however, where they’re not reusable and are normal packaging around a sales unit (or number of sales units). So, polystyrene fish boxes that act as the only layer of packaging placed around the goods would not be covered by the exemption.
     o Intermediate bulk containers are in scope, too, as they are used to transport a bulk quantity of a single commodity rather than multiple sales units.
• HMRC has provided further guidance regarding the exemption for transport packaging on imports.

Definition of ‘plastic’

Plastic is defined as any polymer material to which substances (for example, calcium, dyes or glass) may have been added.

HMRC has provided guidance on when packaging is considered plastic. They’ve stated that plastics include polymers that are biodegradable, compostable or oxo-degradable.

UK material

Plastic Packaging Tax is due on UK-produced components at the point that they become finished. The business that completes the last substantial modification before packing or filling is liable for any tax. If the last substantial modification occurs as part of the same process as packing or filling, the business that completed the last substantial modification before that one is liable for any tax. HMRC has stated that for the last substantial modification to be classed as part of the same process as packing or filling, there cannot be a gap in space or time between the two, as this would indicate two separate processes. HMRC’s guidance suggests that for the last substantial modification to be considered part of the same process as packing or filling, it needs to happen on the same production line as the one on which packing or filling occurs.

HMRC has provided information regarding the definition of a substantial modification, alongside examples of when a modification process would be classed as substantial. A substantial modification refers to a change that affects the shape, structure, thickness and/or weight of an individual component. For example, the final process undertaken to manufacture a plastic bag (prior to its usage within a ‘boil-in-the-bag’ product) would be the last substantial modification, where that process has affected the component’s shape, structure, thickness and/or weight.

A substantial modification does not refer to different components being placed together to make a single container of goods, such as a ready meal container involving a pot, layer of film and label. Placing these components together would involve sealing and labelling – listed by HMRC as changes which do not amount to substantial modifications.

Imported material

Tax is due from the importer on finished components imported into the UK once all custom procedures have concluded.

If a component is imported into the UK and it’s known at the point of import that the component will undergo a substantial modification that is not part of the same process as packing or filling, the importer does not need to pay the tax. Any tax that’s paid on a component can be reclaimed if it later undergoes a substantial modification that is not part of the same process as packing or filling (the reclaim process is discussed later in this guidance). If, for example, a reel of film is imported into the UK and later used to make a plastic tray, whether the importer can reclaim any tax paid on the reel of film will depend on whether the reel’s been substantially modified during the tray’s production and whether the tray is packed or filled as part of the same process. If, for example, a forming process is undertaken on the reel (whereby it is formed into a new packaging component by being heated and shaped), a substantial modification has occurred. Plastic Packaging Tax is due from the UK manufacturer that completes the last substantial modification before packing or filling and any tax paid on the reel by the importer can be reclaimed, unless the tray was packed or filled during the same process as the one in which the reel was heated and shaped. If it was, the importer cannot reclaim any tax that it paid on the reel.

Imported packaging that already contains goods is considered finished. However, the goods contained within the packaging do not need to be considered as part of the weighing process. So, no tax is due on the weight of any fillings, as confirmed by HMRC.

If a component leaves and re-enters the UK, the tax needs accounting for at the point of re-entry, but any tax paid can be reclaimed upon the component being exported again.

Recycled content

If a component contains 30% or more recycled plastic, it will not have the tax levied upon it. However, it still contributes towards the assessment of whether the 10-tonne threshold has been reached.

HMRC has provided guidance regarding how it specifically defines recycled plastic. In summary, this is plastic that’s been reprocessed, via a chemical or manufacturing process, from recovered material.

Rolled-over European Regulation EC 282/2008 refers to how materials and articles that are made entirely or partially from recycled plastic, and are intended for use as a food contact material, should only be obtained from processes that have been assessed for safety by the appropriate authority. Notwithstanding the Northern Ireland Protocol, this indicates that it’s legal for recycled plastic to be used in contact with food under specific circumstances. However, there are currently limited alternatives to non-recycled plastic. Further information is available from the Food Standards Agency regarding when recycled plastic can be used in contact with food in Great Britain, under the sub-heading ‘AIMS and recycled plastic processes’.