Definitions of finished components and substantial modifications for Plastic Packaging Tax
Check when packaging is classified as a finished plastic packaging component, and what is meant by substantial modifications, to find out if you must register for the tax.
You need to register for Plastic Packaging Tax if you:
- expect to import into the UK or manufacture in the UK 10 tonnes or more of finished plastic packaging components in the next 30 days
- have imported into the UK or manufactured in the UK 10 tonnes or more of finished plastic packaging components in the last 12 months
This only applies for packaging subject to the tax and packaging in scope of the tax.
Definition of finished plastic packaging components
Plastic Packaging Tax is chargeable when an individual plastic packaging component is finished, if this takes place in the UK, or when finished plastic packaging is imported.
Packaging can be a single component, for example a single bag to contain goods, or it can be made up of several finished packaging components to enable the packaging to contain goods, for example a bottle, cap, and label.
If you import plastic packaging that is already filled with goods, it is treated as a finished packaging component, and you will be liable for the tax on each component that makes up the packaging of the goods.
If you manufacture plastic packaging, or import unfilled plastic packaging, you will need to work out when the packaging component or components are finished.
A component is finished when it has undergone its last major modification. Where the last major modification happens as part of the packing or filling process of the packaging, the component is finished after it has undergone the last major modification before that one.
The business that undertakes the last substantial modification before the packing or filling process will be liable for the tax.
Definition of a substantial modification
A substantial modification is the last manufacturing process which changes the nature of the packaging component.
A substantial modification is a manufacturing process that changes the packaging components’ features. The features are the:
- shape
- structure
- thickness
- weight
Not all manufacturing processes are substantial modifications.
If you complete multiple processes at the same time to finish a packaging component, and at least one is the last substantial modification process, then all the other processes carried out at the same time will also be regarded as the last substantial modification. This includes where any of the other processes would not otherwise be regarded as substantial modifications.
If you import plastic packaging components which have already undergone their last substantial modification, they will be considered finished and you will be liable for the tax.
Examples of manufacturing processes which are substantial modification processes
This is not an exhaustive list.
Extrusion
This is when the raw material is pressed through a die to form the required shape.
Sheets of plastic and blown film can be made in this way.
Forming
This is when a sheet of plastic is shaped into packaging by being heated and shaped, including thermoforming and vacuum forming.
Examples include:
- pots
- tubs
- trays
This does not include blowing or forming a packaging component from a preform.
Layering and laminating
This is when 2 or more layers are bonded together.
Labels can be made in this way.
Moulding
This is when plastic is moulded into a certain shape.
Bottle lids and bottle preforms can be made in this way.
Printing
This is when ink is applied to plastic, usually to provide detail about what will be going in the packaging.
Changes which are not classed as substantial modifications
Not all manufacturing processes which change the packaging’s key features are classed as a substantial modification.
The following processes are an exhaustive list of the processes which are not classed as substantial modification.
Blowing
Blowing or otherwise forming a packaging component from a preform.
For example, blowing bottle preforms into bottles.
Cutting
Cutting the packaging, for example cutting film to size or cutting formed trays out of a larger sheet.
Labelling
Labelling the packaging, for example gluing a label to a tub or heating a shrink film label onto a bottle.
The label may also be a packaging component which should be considered for the tax.
Sealing
Sealing the packaging, for example attaching a film lid onto a tub or attaching 2 sides of a piece of film to close a bag.
Importers of plastic packaging
If you import finished plastic packaging components, Plastic Packaging Tax is chargeable when the packaging has cleared all customs procedures. This includes imports from the Channel Islands and from outside of the UK into the Isle of Man.
The importer is generally the consignee on importation documents, unless the consignee can prove they are acting on behalf of someone who is controlling the import. For example, a haulier may deliver plastic packaging components into the UK on behalf of a UK distributor. The distributor will be liable for the tax on those plastic packaging components because they are controlling the order.
If you’re the consignee and believe that you’re not responsible for the tax, it is an important part of your due diligence that you make sure that the importer you’re acting for is accounting for any Plastic Packaging Tax due.
If you import finished plastic packaging components using incoterms, you will need to agree with the other business about who is responsible for including the details on their Plastic Packaging Tax return and paying the tax.
You can import certain types of reusable packaging into the UK using the Temporary Admission procedure. Reusable packaging that you import in this way will not be subject to Plastic Packaging Tax.
Examples of when plastic packaging components are finished
Example 1
- Business A imports drinks bottles (bottle, label and top are individual finished plastic packaging components) already filled into the UK.
- Business A then sells them to Business B.
The 3 packaging components are considered finished when the drinks are imported.
This means Business A is responsible for the tax, because the drinks bottles are already filled, so the packaging and its components are already finished.
Example 2
- Business A imports film into the UK.
- Business B laminates the film.
- Business C cuts the film.
- Business D uses the film to wrap food.
The packaging component is finished when the film is laminated.
This means Business B is responsible for the tax, because cutting is one of the 4 processes that is not treated as a substantial modification, so the last substantial is when the film is laminated.
Example 3
- Business A imports film into the UK.
- Business B laminates the film and then cuts it and loads it onto smaller rolls.
- Business C uses it to wrap food.
The packaging component is finished when the film has been cut.
This means Business B is responsible for the tax, because although cutting is not a substantial modification, the same business performed the last substantial modification (lamination).
Example 4
- Business A is a UK business that extrudes preform bottles.
- Business B blows the preforms into bottles.
- Business C fills the bottles.
The packaging component is finished when the preform is extruded.
This means Business A is responsible for the tax, because blowing a bottle from a pre-form is one of the 4 processes that are not treated as a substantial modification.
Example 5
- Business A extrudes film and loads it onto rolls.
- Business B prints on the film and perforates it.
- Business C uses the film to form bags around salad as part of the pack filling process.
The packaging component is finished when the film is printed on.
This means Business B is responsible for the tax. While forming a bag is a substantial modification, because it is done as part of the pack-filling process the tax becomes due at the previous substantial modification, which is when the film is printed on.
Updates to this page
Last updated 5 September 2023 + show all updates
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Added translation
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To add detail to the definition of a finished plastic packaging component.
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You must now look back 12 months from the last day of the month, to check how much finished plastic packaging components you manufactured and imported, instead of looking back from 1 April 2022.
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'Importers of plastic packaging' has been updated to show that certain types of reusable packaging will not be subject to Plastic Packaging Tax if they are imported into the UK under the Temporary Admission procedure.
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The section 'Importers of plastic packaging' has been updated to clarify that Plastic Packaging Tax is chargeable on imports from the Channel Islands and from outside of the UK into the Isle of Man, when the packaging has cleared all customs procedures.
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Added translation.
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The guide has been updated to make clear who is liable for Plastic Packaging Tax when packaging is imported.
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The guide has been updated with examples of when plastic packaging components are finished and information for importers of plastic packaging.
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Added translation
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First published.