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Plastics packaging tax to fund waste management from 2022

Money raised from a new tax on the use of virgin plastics will be ploughed back into support for wider action against single-use plastics, according to chancellor Philip Hammond.

Earmarking tax revenues in this way is unusual, but the Treasury said in an explanation of the new tax that money raised would be devoted to combatting plastic waste together with waste and litter generally and “improving the waste system”.

Hammond said in his Budget: “There will be a new tax on the manufacture and import of plastic packaging which has less than 30% recycled plastic content.”

He said 2.26 million tonnes of plastic packaging were used in the UK each year, most made from new plastic because of the higher costs of recycled material.

The Treasury document made it clear that, subject to consultation, the new tax would take effect from 1 April 2022, hitting any business that produces or imports plastic packaging that does not contain at least 30% recycled content.

It said: “The tax will provide a clear economic incentive for businesses to use recycled material in the production of packaging which, in turn, will create greater demand for this material.”

The new tax, described by the Treasury as “world-leading”, will work alongside planned reforms to the packaging producer responsibility system that would encourage businesses to ensure that far more packaging can be recycled and to use more recycled plastic in their products. There will be a separate consultation on these.

Hammond also allocated £10m more for plastics research and development work and £10m for recycling innovations such as smartbins.

The Treasury said it shelved ideas for a tax on disposable plastic cups, despite the popularity of this in a public consultation last summer.

“The Government recognises this is a problem, but has concluded that a levy on all cups would not at this time be effective in encouraging widespread reuse,” it said. “Businesses are already taking steps to reduce the impact of disposable cups. The Government expects industry to go further and will return to the issue if sufficient progress is not made.”

Hammond also shunned an incineration tax, which some had expected might figure in the Budget. The Treasury said that, in the long term, the Government “wants to maximise the amount of waste sent to recycling instead of incineration and landfill”.

If this did not happen as a result of other policies, it would “consider the introduction of a tax on the incineration of waste, operating in conjunction with landfill tax, taking account of the possible impacts on local authorities”.

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