At the start of this year, in what was a lobbying win for NFU Scotland and the other UK farming unions, HM Treasury accepted that the plastic film used by many farmers and crofters to produce silage bales would continue to be exempt from the forthcoming Plastic Packaging Tax (PPT). The acknowledgement by the UK Government that silage film was a highly specialist product, the primary purpose of which is to enable the fermentation process needed to produce silage, was welcomed by NFU Scotland members.

However, the fact remains that as of 1st April 2022 PPT will be coming into force. PPT is being introduced with the primary aim of encouraging the use of recycled plastic in the supply chain to deal with the global issue of plastic pollution. Businesses who manufacture or import ten or more tonnes of plastic packaging within a 12-month period may need to register for the tax. The tax, which will be levied at £200 per tonne, will apply to packaging that is predominantly plastic by weight and which contains less than 30% recycled material. Biodegradable, compostable, and oxo-degradable plastic are also included in the tax. For NFU Scotland members, we envision that your liability for PPT will most likely predominantly come from importing plastic packaging components above the threshold. If you buy plastic packaging from within the UK, the manufacturer of the plastic packaging will be liable for the tax.

It is also worth noting that the taxable business is the one that completes the ‘last substantial modification’ to the plastic packaging component. If the last substantial modification is made at the point where empty packaging is filled with product, then it will be the last substantial modification prior to this. NFU Scotland urges members to undertake more stringent due diligence checks, particularly in regard to importing, to ensure tax is being paid.

If you think you are not eligible for the tax, you may still be required to register and keep records of the plastic you import or use in order to prove to HMRC that you have no obligation to pay the tax. While it is envisioned that the tax may only be chargeable on a relatively small number of companies, record-keeping and tracking requirements will fall on everyone who imports plastic packaging. For NFUS members, you are urged to consider how this tax may affect your business, either directly or indirectly. Consider reviewing the plastic packaging you use and see if changes to more recyclable materials can be made. However, be mindful that for food products, packaging should only contain recycled plastic where it is permitted under other regulations and food safety standards.

Many affected businesses will be reassessing their use of plastic packaging and therefore there may be some disruption in supply chains. While smaller businesses who use less than 10 tonnes of plastic packaging per year are exempt, it may be that the tax brings a wider shift in plastic packaging use that impacts other businesses. Full guidance is available on the UK Government website and the NFUS business guide update.