UK’s Plastic Packaging Tax from April 1, 2022: If you increase the price of the product to cover the cost of PPT, VAT will still be payable on the whole price charged for the goods you sell.

The UK Government has introduced a UK-wide Plastic Packaging Tax into the Finance Bill 2021 that will come into force on 1 April 2022. Plastic Packaging Tax applies to finished plastic packaging components manufactured in or imported into the UK containing less than 30% recycled plastic when measured by weight. The rate of the tax will be 200 GBP per metric tonne of plastic packaging. 

Companies that manufacture or import plastic packaging components; or import packaged goods into the UK will be affected. ‘Small operators’ who manufacture or import less than 10 tonnes of plastic packaging in a 12-month period are exempted.  

Unlike VAT, HMRC confirmed that PPT is only paid once the product is finished or imported. If you choose to increase the price to cover the cost of PPT, VAT will still be payable on the whole price charged for the goods you sell according to VAT rules. 

Source: HMRC