A policy announced in the UK Spring Budget 2023 confirmed that the Plastic Packaging Tax rate in the UK increased on 1 April 2023 to align with the Consumer Price Index (CPI).

The Plastic Packaging Tax aims to create an economic incentive for UK businesses to use recycled plastic in the production of plastic packaging, thereby increasing demand for recycled plastic and stimulating higher levels of recycling and collection of plastic waste.

The UK government hopes that this tax will help it achieve its goal of eliminating avoidable plastic waste by 2042.

Who is affected by the Plastic Packaging Tax?

The tax affects UK manufacturers and importers of plastic packaging. It also affects UK business customers who purchase plastic packaging or goods with plastic packaging.

Consumers who buy plastic packaging or goods in plastic packaging in the UK will also be affected.

However, manufacturers and importers of less than ten tonnes of plastic packaging per year will be exempt from the tax to avoid excessive administrative burdens compared to the tax liability.

The rate of the Plastic Packaging Tax will be amended from £200 per tonne to £210.82 per tonne with effect from 1 April 2023, as set out in section 45 of the Finance Act 2021.

Expected economic and social impacts of the levy

The government expects that this measure will not have any significant economic impacts but will help support its environmental goals by creating a greater demand for recycled plastic.

Even if businesses pass on the charge, the cost to consumers is expected to be small since plastic packaging usually makes up a very small portion of the total cost of goods.

According to the UK government’s impact assessments, this measure is not expected to adversely affect any group sharing protected characteristics or any impact on civil society organisations.

It is also not expected to change any tax administration obligations or processes. The measure will be monitored through information collected from tax returns and receipts.