The plastic tax is just the beginning: Manufacturers need to take steps now

Posted on 31 Mar 2022 by The Manufacturer

On 1st April 2022, the way manufacturers handle their plastics is set to radically change with the introduction of a Plastic Packaging Tax. All plastic packaging components made or imported into the UK will be liable for a specific material tax if they don’t meet a minimum recycled content of 30% by weight.

Many manufacturers are not ready for this change. In fact, a poll by the FPA (Foodservice Packaging Association) found that 80% of its members are not prepared.

This kind of legislation has been a long time coming. If the UK is to meet its recycling targets, measures like this will continue to be put in place and the manufacturing industry and others need to ensure they are prepared.

Unfortunately, some businesses have indicated that they may stomach the tax rather than switch to recycled materials. Industry sources predict that this could be passed onto UK consumers, inflating prices by as much as £300m a year. And this is amidst already soaring prices as the UK suffers from the highest inflation in three decades.

Yet, this is just the start of upcoming plastics legislation. Several new requirements relating to the manufacturing of plastics are on the horizon over the next few years. This means manufacturers need to apply long-term thinking to their plastics use, waste and recycling to drive sustainable change.

Legislation is crucial

The need for further plastics legislation has become clear over the last few years. A House of Commons briefing paper estimated that Britain gets through five million tonnes of plastic every year, roughly half of which is used for packaging.

Government data also revealed that just 47% of total plastic packaging waste in this country is recycled or recovered.

If Britain is to achieve the Government’s target of eliminating avoidable plastic waste by the end of 2042, such legislation is crucial.

The Plastic Tax

The Plastic Tax is to be charged at a rate of £200 per tonne. Businesses that manufacture or import less than 10 tonnes of plastic in a 12-month timeframe will be exempt from the tax. However, HMRC say businesses will need to register for Plastic Packaging Tax if they’ve manufactured or imported 10 or more tonnes of plastic packaging within the last 12 months or are projected to do so within the next 30 days.

It will therefore be crucial for businesses to keep accurate accounts of their packaging manufacturing and imports rates, even if they fall below the 30% threshold.

The Department for Environment, Food and Rural Affairs (DEFRA) has published a detailed update on what is included in the tax.

What’s next?

But April 1st is just the start. There’s more legislation to come that businesses must prepare for. Next year will see the introduction of Extended Producer Responsibility for Packaging (EPR) legislation.

EPR for Packaging plans have been set out by the Government to encourage businesses to prioritise recyclable materials and help improve Britain’s current recycling rate from 45% to the target of 65% by 2030.

The policy’s objective is to deliver a more circular economy for packaging, where greater quantities of recyclable waste are reprocessed into valuable, high-quality secondary resources.

EPR reporting begins in 2023 and will be based on a business’s 2022 data. As well as making the collection of additional recycling data compulsory, businesses will need to report on all plastic packaging being manufactured and imported.

It also places the financial burden of managing products that have reached the end of their life on producers, shifting the full cost of collecting household waste away from the taxpayer. Businesses placing materials on the market will bear the full costs of the collection, sorting, recycling and disposal of packaging waste.

The UK Government is also expected to roll out a Deposit Return Scheme (DRS) on drink bottles in England, Wales and NI sometime in 2024 – following its introduction in Scotland next year.

Manufacturers need to put processes in place now to ensure they have visibility of all the materials used within their businesses.

How manufacturers can prepare

In fact, some businesses may need to make significant changes to adapt to new requirements.

Businesses that deal with plastic materials will need to make sure that sustainability is at the heart of their production and design process. While some producers may be able to absorb the levies initially, in the longer term, they will need to integrate recycled materials into their packaging.

Meanwhile, more must be done to meet the growing demand for recycled material. The cost of recycled plastic polymers has increased by as much as 70% in the past year, yet poor waste management means that a significant amount of this valuable material still ends up in landfill.

By ensuring they have the proper processes in place, businesses can both reduce their waste costs through recycling rebates, whilst at the same time contributing to the UK’s increasingly circular economy.

Thinking differently about plastics waste

Manufacturers should consider how they can optimise their waste streams to reduce the amount of plastic that ends up at landfill. The most effective way of dealing with waste is to not create it in the first place, so efficiency and optimal use of the most effective materials is crucial.

It’s time that we all started thinking about waste differently and treat it as a valuable resource. Most manufacturing companies generate complex waste streams. Ensuring waste (including, but not limited to, plastic) waste is properly segregated will also reduce their waste management costs. Additionally, Manufacturers can work with their waste management provider to implement a waste hierarchy to reduce, reuse and recycle materials wherever possible.

Waste audits can also, give manufacturers the chance to drive out waste costs, increase recycling, and reduce their environmental impact – all while making sure they receive value for their waste materials.

By adequately preparing for an increased legislative focus on plastics and materials and adapting their waste and recycling processes accordingly, manufacturers will be better equipped to meet the environmental challenges of the years ahead.

About the author

Edward Pigg hi-res

Ed Pigg, Managing Director of Axil Integrated Services  

Edward formed AIS in late 2018 and has overseen its steady growth ever since. He has a long career of experience in delivering complex business services ranging from asset finance, automotive and the waste industry. He is passionate about building performance teams and delivering excellent service to customers and supply partners.