Plastic packaging tax

HMRC has updated its plastic packaging tax guidance Further information for businesses at section 2.4 ‘finished packaging component’ to provide further detail on the point at which a plastic packaging component becomes chargeable to plastic packaging tax. A component becomes chargeable when it is finished, having undergone its ‘last substantial modification’.

Where a substantial modification is undertaken as part of the packing or filling process it should be ignored for the purposes of determining when a component is chargeable for plastic packaging tax. In these cases, the business that undertakes the last substantial modification before the packing or filling process will be liable for the tax.

Businesses which import plastic packaging components which have already undergone their last substantial modification, and are therefore considered finished, will be liable for plastic packaging tax.

The guidance also introduces a number of new examples of manufacturing processes that are substantial modification processes.

Plastic packaging tax is due to come into effect on 1 April 2022.