Finance Act 2021 (Plastic Packaging Tax)
What this means for your business
- Enforced by
- HMRC
- Applies to
- United Kingdom
- On this page
- 10 compliance obligations, 6 practical guides across 3 topics
What you must do
10 compliance obligations under this legislation — 3 can result in imprisonment.
Management duties 1
Avoid contrived tax arrangements for Plastic Packaging Tax relief
If your business sets up any scheme whose main purpose is to obtain a tax advantage on plastic packaging (such as a super‑deduction or special rate allowance), HMRC can adjust your tax bill. You must ensure every arrangement has a genuine commercial reason and is not just a shortcut to reduce tax.
Notifications 1
Notify HMRC of Plastic Packaging Tax liability within 30 days
When your business first becomes liable to register for the Plastic Packaging Tax (as a producer or importer of liable plastic packaging), you must tell HMRC about that liability. You have 30 days from the day the liability arises to send the notification. If you don’t, HMRC can still register you, but you may face enforcement action.
Payments and fees 3
Adjust contract payments to reflect plastic packaging tax
If you sell a chargeable plastic packaging component and, after the contract is signed, the plastic packaging tax is applied or changes, you can (and should) adjust the price you charge to reflect that tax, unless your contract says otherwise. You must also ask the buyer for details if they later turn the component into another chargeable plastic item, again unless the contract provides a different arrangement.
Pay plastic packaging tax on chargeable components you produce or import
If your business makes a plastic packaging component that falls under the chargeable definition, you must pay the plastic packaging tax on it. The same applies if you import such a component on behalf of someone else – you are responsible for the tax payment.
Pay plastic packaging tax on chargeable items you produce or import
If your business makes a plastic packaging component in the UK, or brings one into the UK for your business, you become liable to pay the plastic packaging tax on that component (unless it is exempt). This means you must treat those items as taxable and ensure the tax is accounted for.
Offences and prohibitions 4
Conduct involving evasion or misstatement of plastic packaging tax
14 years imprisonmentIf your business carries out actions that amount to evading or misstating the plastic packaging tax – i.e. conduct that must have involved committing the fraud or misstatement offences under sections 77 or 78 – you can be prosecuted even if the exact underlying offence isn’t identified. On conviction in the Crown Court you face up to 14 years’ imprisonment and an unlimited fine, plus a fine that can be the greater of £20,000 or three times the amount of tax you tried to evade.
Fail to ensure plastic packaging tax compliance as a tax representative
If you act as a tax representative for a non‑resident taxpayer under the plastic packaging tax, you must make sure that taxpayer meets all its tax obligations. Failing to secure that compliance (or any wrongdoing while acting on their behalf) makes you personally liable, just as if you were the taxpayer yourself, and you could be prosecuted.
Fraudulently evade plastic packaging tax
14 years imprisonmentIf you knowingly help, or take steps towards, avoiding the plastic packaging tax – for example by claiming a tax credit or a refund you are not entitled to – you commit a criminal offence. On conviction you can be sentenced to up to 14 years in prison and face an unlimited fine (or a fine up to three times the tax you tried to evade).
Make false statements on plastic packaging tax returns
14 years imprisonmentIf you provide a document or information to HMRC about the plastic packaging tax that you know is false, or you act recklessly or intend to deceive, you have committed an offence. On conviction you can be sentenced to up to 14 years in prison and face an unlimited fine in the Crown Court, or up to 6 months’ imprisonment and a fine of at least £20,000 (or higher where the false return understates tax) in the magistrates’ courts.
Reporting and filing 1
Include plastic packaging tax statement on business invoices
When you sell a plastic packaging component to another business and you have to pay plastic packaging tax on it, you must show the amount of that tax on the invoice you issue. This lets your customer see the tax charge clearly.
Penalties for non-compliance
4 penalties under this legislation. 3 can result in imprisonment. 3 carry an unlimited fine.
Conduct involving evasion or misstatement of plastic packaging tax
Unlimited fine and/or 14 years imprisonment
Fraudulently evade plastic packaging tax
Unlimited fine and/or 14 years imprisonment
Make false statements on plastic packaging tax returns
Unlimited fine and/or 14 years imprisonment
Fail to ensure plastic packaging tax compliance as a tax representative
Penalty applies
Practical guidance
Our guides explain how to comply with the requirements above.
How to complete your VAT return
Step-by-step guidance on what to include in each box of your VAT return. Covers boxes 1-9, rounding rules, common mistakes …
Filing your Self Assessment tax return
Who must file a Self Assessment return, how to complete and submit it, what expenses you can claim, and how …
Correct VAT return errors
How to fix mistakes on your VAT return and when to tell HMRC. Covers error correction thresholds, adjusting your next …
Submitting VAT returns
How to calculate VAT, choose an accounting scheme, submit returns through Making Tax Digital, pay on time, correct errors, claim …
Packaging waste producer responsibilities
Who must comply with Extended Producer Responsibility (EPR) for packaging, how to register and report data, and what disposal fees …
Plastic Packaging Tax
Tax obligations for businesses importing or manufacturing plastic packaging with less than 30% recycled content.
Sections and provisions
170 classified provisions from this legislation.
Duties 7
- s.14 Counteraction where arrangements are contrived etc adjustments required
- s.43 Charge to plastic packaging tax
- s.44 Liability to pay plastic packaging tax
- s.56 Notification of liability and registration
- s.68 Statements for business customers
- s.70 Adjustment of contracts
- s.115 Relief from stamp duty land tax for freeport tax sites
Offences and penalties 5
Powers 12
- s.53 Tax credits
- s.58 Correction of the register
- s.60 Measurement of weight etc
- s.61 Payment, collection, recovery
- s.65 Security for tax
- s.66 Unincorporated bodies
- s.72 Prevention of artificial separation of business activities: directions
- s.74 Death, incapacity or insolvency of person carrying on a business: regulations
- s.75 Transfer of business as a going concern: regulations
- s.96 Distance selling: power to make further provision
- s.116 Penalties for failure to make returns etc
- Schedule 12 Plastic packaging tax: information and evidence
Definitions 21
- s.10 Further provision about super-deductions etc additional VAT liability
- Schedule 14 Plastic packaging tax: assessment of penalties under section 80 penalty daily penalty
- Schedule 24 Penalties for failure to make returns etc HMRC
- Schedule 26 Penalties for failure to pay tax annual accounting scheme instalment HMRC
- s.33 Deduction where business rates etc repaid coronavirus support arrangement coronavirus
- s.35 Payments made to victims of modern slavery etc the Trafficking Convention
- s.46 Payment
- s.47 Chargeable plastic packaging components
- s.48 Meaning of “plastic packaging component”
- s.49 Meaning of “plastic” and “recycled plastic” Plastic Organic recycling
- s.50 Time of importation
- s.52 Exempt plastic packaging components medicinal product
- s.54 The register the register data protection legislation
- s.57 Cancellation of registration
- s.83 Interpretation the Commissioners HMRC the register
- s.97 Supply of imported works of art etc
- s.113 Designation of special tax sites
- s.133 Tax consequences of reform etc of LIBOR and other reference rates reference rate
- s.135 Interpretation
- Schedule 1 Small profits rate for non-ring fence profits the standard small profits rate the standard marginal relief fraction fixed-rate preference shares
- ... and 1 more definitions
Exemptions 19
- Schedule 2 Temporary extension of periods to which trade losses may be carried back
- s.4 Starting rate limit for savings for tax year 2021-22
- s.5 Basic rate limit and personal allowance for future tax years
- s.9 Super-deductions and other temporary first-year allowances
- Schedule 10 Plastic packaging tax: recovery and overpayments
- s.12 Disposal of assets where super-deduction made
- s.13 Disposal of assets where SR allowance made
- s.17 Extensions of plant or machinery leases for reasons related to coronavirus
- Schedule 20 Customs duty: steel products
- s.26 Exemption for coronavirus tests
- s.31 Covid-19 support scheme: working households receiving tax credits
- s.40 Annual exempt amount
- s.51 Plastic packaging components intended for export
- s.55 Liability to register: producers and importers
- s.63 Records
- s.84 Regulations
- s.89 Relief from higher rate charge for certain housing co-operatives etc
- Schedule 9 Plastic packaging tax: secondary liability and assessment notices and joint and several liability notices
- Schedule 11 Plastic packaging tax: reviews and appeals