Plastic packaging tax - What you need to know & how we can help

Blog updated on 10th August 2022 by Ed Bentley

Plastic packaging tax (PPT) is an environmental strategy created to increase demand for recycled plastic to divert it away from landfill or incineration. The government expects this will increase levels of recycling of plastic waste.

What is Plastic Packaging Tax (PPT)?

A tax on plastic packaging has been introduced in the United Kingdom from 1st April 2022. Put simply, this is a tax on any material that is designed to hold or carry another item that is made of plastic and/or has a 'significant portion' of plastic.

The implications will be felt by many businesses in any sectors that use plastic packaging. Particularly relevant for the food and drink industry, the new "Plastic Packaging Tax", known as PPT, will mean that manufacturers and importers of plastic packaging will have to pay a minimum rate of tax based on the amount of plastic packaging they put onto the UK market.

Who is liable to pay PPT?

The UK is one of the world's largest users of plastic packaging. There are currently 5,000+ UK businesses involved in the manufacture or import of plastic packaging. Businesses that produce or import more than 10 tonnes of plastic packaging per annum will be liable to register for the PPT scheme.

Any business that manufactures or imports plastic packaging in the UK will need to register for a PPT account. There will also be a credit system where companies can apply for credits on exported packaging including on packaged goods.

It is expected that PPT will affect companies in many sectors, including:

• Packaging Manufacturing
• Consumer Goods
• Food & Beverage
• Cosmetics
• Pharmaceutical
• Chemical

What products will be affected by PPT?

Plastic tax will be charged on plastic packaging that has less than 30% recycled content. The tax will be extended to imported products like drinks in plastic bottles.

Certain exemptions apply. For example, PPT will not be charged on medicines with a license for human consumption.

Exported goods will also be exempt provided they are exported within a 12-month timescale.

How much is Plastic Packaging Tax?

PPT will be set at a rate of £200 per metric tonne of plastic packaging that contains less than 30% recycled plastic.

Where does SAP Business One come in?

SAP Business One offers a level of flexibility that could be very useful for businesses affected by this new tax.

SAP Business One is an organisation-wide solution, allowing information to be stored which aids the calculation and reporting of applicable PPT. For example:

• Where the plastic packaging associated with components or finished products is consistent, store the amount per product on the Item Master and then use this to calculate the amount of packaging purchased or sold and applicable to PPT.
• Capture information about inbound or outbound plastic packaging on relevant transactions. These can then be collated in a report for calculation of PPT payable.
• Use SAP Business One dashboards to present the amount of plastic packing that contains/does not contain recycled plastic to your sustainability manager
• Calculate the applicable PPT to post month end accruals for future submissions

How we can help

We believe that our customers should have access to world class cloud solutions that are intuitive, scalable and secure.

We empower customers through the use of Cloud technologies to automate processes, connect ecosystems, analyse performance, and improve future outcomes.

If you would like to find out more about LAKE and SAP Business One, please register for one our regular SAP webinars, or call me now on 0113 273 7788.

by Ed Bentley

General Manager, ERP