There will be an exemption for producers and importers of small amounts of plastic packaging to mitigate against disproportionate administrative burdens in comparison to the tax liability.
General description of the measure
Policy objectiveThe tax will provide a clear economic incentive for businesses to use recycled material in the production of plastic packaging, which will create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.
Background to the measureAt Budget 2017, the government announced a call for evidence into using the tax system or charges to tackle single-use plastic waste and received 162,000 responses.
Detailed proposalOperative date
The tax is new so there is no current law.
• how the tax will be collected, recovered and enforced
Summary of impacts
These figures are set out in Table 2.1 of Budget 2020 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2020.
Impact on individuals, households and familiesThis measure is not expected to impact individuals unless businesses pass on the charge. It is expected that if all the tax is passed on to individual consumers, the cost to consumers will be small as plastic packaging usually makes up a very small amount of the total cost of goods. On this basis we expect customer experience to stay broadly the same. There is not expected to be any impact on family formation, stability or breakdown.
It is not anticipated that this measure will impact on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to impact on up to an estimated 20,000 producers and importers of plastic packaging. One-off costs include familiarisation with the new rules, training for staff, registration with HMRC, and developing the required reporting framework to complete tax returns. On-going costs could include completing, filing and paying tax returns, keeping appropriate records (including those required to claim the export credit), and amending returns. There will also be new registrations and de-registrations each year. Customer experience could be negatively impacted as this is a new tax that businesses will need to understand and comply with. However, to support businesses HMRC will develop clear guidance and other tools to help businesses understand and meet their obligations.It is expected that the impact on businesses will be significant and the overall impact will depend on the design of the tax. The government will be holding a consultation on the design and implementation of the tax, including on guidance and tools that can help businesses meet their obligations, launching at Budget this year to gain a better understanding of these impacts.
Operational impact (£m) (HMRC or other)HMRC expects to incur one-off capital costs to develop the system for collecting the tax. There will also be on-going resource costs for HMRC to implement this change, monitor compliance and meet customer service needs.
Other impactsJustice Impact Test: In line with other taxes, there will be civil and criminal penalties for failing to comply with the tax, including penalties for failure to register, failure to file returns and failure to pay the tax. A full Justice Impact Test will be completed.
Monitoring and evaluationThe measure will be monitored through information collected from tax returns and will be kept under review through communication with affected taxpayer groups.