Budget 2020: Plastics tax set at £200 per tonne

Chancellor Rishi Sunak has confirmed today (11 March) that a new Plastic Packaging Tax will be introduced from April 2022 to encourage producers to increase their use of recycled material.

Originally announced in the 2018 Autumn Statement, a tax of £200 per tonne will be applied to all domestically-manufactured or imported packaging containing less than 30 per cent recycled content.

Chancellor Rishi Sunak announcing the Budget in the House of Commons
Chancellor Rishi Sunak announcing the Budget in the House of Commons.
The tax was the main announcement related to the waste and recycling sector in a budget that announced significant public investment for the next five years and a major economic stimulus to help the UK economy absorb the shock of the coronavirus.

Announcing the tax rate, Sunak said: “From April 2022, we will charge manufacturers and importers £200 per tonne on packaging made of less than 30 per cent recycled plastic. That will increase the use of recycled plastic in packaging by 40 per cent, equal to carbon savings of nearly 200,000 tonnes.”

The tax has been extended to the importation of filled packaging, which was not previously the case, and a minimum threshold for the tax of 10 tonnes of packaging produced a year will be applied to protect smaller businesses from disproportionate charges.

Receipts from the tax are expected to total £240 million in 2022/23, £235 million in 2023/24 and £220 million 2024/25.

A further consultation has also been launched on the detailed design and implementation of the tax, which includes possible exemptions for certain types of medical packaging, while the rate will remain under review to ensure that it continues to incentivise the uptake of recycled content.

The first consultation on the Plastics Packaging Tax run by the Treasury in 2018 attracted an unprecedented level of public engagement, with 162,000 responses between 13 March and 18 May 2018, the most of any consultation in the Treasury’s history, driven by a surge in public concern over the environmental impact of plastic waste.

Read more: Let’s talk about the Plastics Tax

Other announcements related to the waste and recycling sector included the commitment of an additional £700,000 for the establishment of IT systems to administer a packaging extended producer responsibility (EPR) scheme, which will make manufacturers financially responsible for the management of their packaging at its end of life, £7.2 million for a digital waste tracking system and £2 million to support innovative approaches to tackling fly-tipping.

The government has also announced that it will be extending the Renewable Heat Incentive (RHI) until 31 March 2022, extending the deadline from 31 March 2021. The government will also be consulting on a green gas levy to incentivise the development of low-carbon gas. The news will come as a boost for the anaerobic digestion (AD) sector, which produces biomethane from food waste to inject into the gas grid. 

The Budget also contained a commitment to lift tax relief for red diesel – used by many waste and recycling operators to power heavy machinery – except for in agriculture, fish farming, rail and non-commercial heating.

You can read the Budget 2020 in full on the government website.

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