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Packaging businesses are preparing for the impact of the plastic packaging tax, which came into effect in April 2022. The new levy will apply to all single-use plastics, including straws, bags, and cups. While some businesses are worried about how the tax will impact their bottom line, others see it as an opportunity to invest in more sustainable packaging options. Whatever your opinion on the plastic packaging tax, one thing is clear: it will have a significant impact on the packaging industry.

According to official estimates, the UK Plastic Packaging Tax will earn around £235 million in revenue in its first year. Some of this money will offset the one-time costs of establishing the new tax. Such as investing in the necessary technology and processes.

We expect these set-up expenses to be in the area of £42M, leaving a balance of around £193M. There is currently no definite explanation for how the government will use the remaining funds.

The government could use it to support research and development to assist more firms in transitioning away from single-use plastic packaging or plastic packaging with zero or low recycled polymer content.

Another idea would be to support grants to help firms explore and implement closed-loop recycling systems that keep plastic material in and out of landfills.

Given that the tax is estimated to produce up to £905 million by 2026, it might play a critical role in assisting the government in meeting its aim of eradicating ‘avoidable’ plastic waste by 2042 and transitioning the UK to a more circular economy.

How is our company dealing with the cost of the UK Plastic Packaging Tax?

The strains of Brexit and the Covid-19 pandemic have produced an unpredictable world. This worsens with global raw material shortages and results in price increases.

Most firms’ margins are under pressure like never before, and introducing a new tax will cause alarm for many. If you’re wondering how to absorb or lessen this increased responsibility, you have a few alternatives.

To begin, you might consider passing on the expense of the packaging tax by raising the price of your items. This may affect your sales and overall commercial success. Especially if your competitors have a lower tax burden and do not have to increase the same price.

Second, you can consider increasing the quantity of packaging you use with more than 30% recycled material. It is vital to remember that packaging with more than 30% recycled material still counts towards the ten-tonne threshold that exempts organisations.

The third and last approach examines new packaging, and packaging materials advances to decrease the quantity of plastic used. Companies that have already begun to implement these adjustments are seeing possible cost reductions in their production processes.

Finally, the UK Plastic Packaging Tax is a force for good. It can cause some short-term discomfort. However, it will drive wider usage of circular economy-optimised packaging, resulting in long-term environmental and societal benefits.

Tams Packaging is happy to provide any advice regarding printed cardboard packaging. Get in touch with your questions.