Advances to the UK Plastic Packaging Tax
UK Government announces plans to advance the Plastic Packaging Tax by approving the use of chemically recycled plastic evidenced by a mass balance approach.
On the 30th of October 2024, the UK Government (HMRC) published its outcome of the consultation on chemical recycling and the adoption of a mass balance approach that was held from July to October 2023.
Within the response, HMRC announced the approval of the use of chemically recycled plastic accounted for through a ‘mass balance approach’ (MBA) to qualify as recycled content, under the Plastic Packaging Tax (PPT). This decision aligns with the UK Government’s commitment to drive investment and growth in the UK, as it will create the conditions to enable the UK chemical recycling sector to thrive.
Mass Balance Calculation
Where:
X is the recycled content, expressed as a percentage;
A is the mass of recycled material;
P is the mass of product.
HMRC expect that advancing the PPT in this way will increase the recycling rate of hard-to-recycle plastics in the UK, such as films and support greater use of recycled plastic in other regulated applications, such as food, drink and medical packaging, which require virgin quality plastic due to packaging safety standards. The chemical recycling process breaks down the plastic polymers to their raw materials, to create recycled content with the desired ‘virgin quality’.
The timeline of when this new approach will be in force and can be used by businesses is to be confirmed, as HMRC plans to engage with stakeholders of PPT to develop the policy and publish draft legislation in due course.
Other changes to the tax
In line with the new MBA, HMRC will introduce an accreditation requirement for certification bodies (such as Beyondly) that certify recycled content in plastic packaging. This accreditation is being introduced due to the complexities associated with the MBA, to protect the integrity of the calculations and the recycled content used in plastic packaging as an exemption against the tax.
The UK Government will also eliminate the use of pre-consumer waste as recycled content for the purpose of PPT. Pre-consumer waste is typically sourced from in-house waste as part of efficient manufacturing processes. Therefore, this change will close the competitive advantage and force sourcing changes for many UK and overseas manufacturers legally claiming pre-consumer waste as recycled content today. This step seeks to uphold the tax’s integrity while encouraging the use of post-consumer recycled materials.
The timeline for enforcing these changes and when businesses need to act is to be confirmed by HMRC.
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Definition of Pre-Consumer Pre-consumer plastic is defined by HMRC as plastic that’s recovered from waste generated during a manufacturing process. It is then processed by a reprocessing facility so that it can be used as a raw material. It does not include any material which would normally be re-used in a manufacturing process to avoid becoming plastic waste. For example, reintroducing scrap or regrind into the manufacturing process after minimal reprocessing. Minimal reprocessing includes shredding and grinding. Definition of Post-Consumer Post-consumer plastic is defined by HMRC as plastic that’s generated by the end user of the product when it can no longer be used for its intended purpose. End users are: · households · commercial facilities · industrial facilities · institutional facilities This includes returns of material from the distribution chain. |
Summary
These developments of the PPT are a step forward to promote circularity in plastic use, following industry stakeholders' consultation feedback that was broadly in support of the proposals. HMRC will continue to engage with stakeholders to finalise the policy, aiming for a balance between environmental goals, emerging chemical recycling technologies and practical implementation for businesses in the value chain.
How can Beyondly help?
Our team of experts are on hand to assist businesses in navigating the complexities of the Plastic Packaging Tax with tailored data and compliance services. By leveraging third-party validation of recycled content and the principles of ISO standards, we ensure that companies can be confidently compliant with the tax while fostering sustainability in their supply chains.
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