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Packaging manufacturer and consultancy Duo is calling on the Government to explain how it will reinvest Plastic Packaging Tax (PPT) revenues to boost UK recycling and sustainability.
A Freedom of Information (FOI) request by Duo to HMRC shows the PPT has generated a total of £135,871,000 in the six months since it was introduced on 1st April 2022.
During this time, 679,143 tonnes of plastic packaging have been liable for the tax. A levy of £200 is applied to every tonne of plastic packaging that does not contain at least 30% recycled plastic.
The FOI request also shows that during the six-month period (Apr – Sept 2022), a total of 1,162,776 tonnes of plastic packaging was exempt from the PPT. This means that approximately 63% of declared plastic packaging during this time contained at least 30% recycled plastic content.
In a HMRC policy paper in July 2021, it was estimated that the PPT would generate £235million in its first year from 2022 – 2023. It was also estimated that HMRC would incur capital costs of £10-£20m for developing a new system to support the tax, together with £22m in staff and other resource costs.
Zoe Brimelow, a Director at Duo believes trends during the first six months of the tax suggest that estimated first-year PPT revenues will exceed £270m. She explains: “There have been two tax-return periods so far, with relatively small variances in the reporting and packaging usage across both. The second period from July – September saw around 70,000 tonnes less in the overall volume of declared plastic packaging, compared to April – June.
“Similarly, the total volume of PPT exempt packaging has remained reasonably consistent, with a difference of approximately 56,000 tonnes between the two returns periods. If these trends continue, it’s reasonable to assume total Plastic Packaging Tax revenues for the first year will easily surpass HRMC’s original estimation of £235million. We’d be looking at a figure closer to £270million.
“Taking these numbers into account, it’s clear that the tax has been successful in creating greater demand for recycled plastic packaging and has generated a huge amount of money. The UK needs serious investment in closed-loop recycling infrastructure to meet increased demand for recycled material, and the funds generated by the tax present an opportunity to build a world-beating recycling infrastructure that can provide high value, high quality recycled materials to reduce dependency on virgin materials. PPT revenues could deliver this. At the very least, businesses that have invested in compliance to pay these taxes or invested heavily in new equipment and processes that contribute to a closed-loop recycling infrastructure should be informed about how hundreds of millions in new revenues will be used.”