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Plastic Packaging Tax – What is it and how is it affecting businesses?
The Plastic Packaging Tax (PPT) was introduced on 1 April 2022, with the intention of encouraging businesses to use more recycled plastic products. In April 2023 the tax per tonne was increased from £200, to £210.82.
For businesses who have manufactured or imported plastic packaging components which contain less than 30% recycled plastic, or expect to import or manufacture over 10 tonnes, this could have a large effect on cashflow. The tax has also seen manufacturers need to pivot their supply chains and production – in a difficult economic environment this can also have detrimental consequences.
The Leonard Curtis specialist debt team have recently agreed a Time to Pay (TTP) for £767,000 of HMRC arrears for a £19.5m business that operates as a manufacturer of plastic packing goods.
The current cost of living crisis had affected the company as it has caused customers to reduce their order sizes to meet their own reduced demand and led to a decrease in the company’s cashflow.
In addition, Government legislation brought forward the date when retailers could switch back to non-recyclable film by three months meaning the company’s stock had to be sold at a loss. This led to a liability of £175k for 'Plastic Tax'.
As a result of this, the amount available to borrow had been significantly reduced due to slower invoice volumes and loss on recyclable stock.
Leonard Curtis’ team, led by Awaes Ali, secured a ten-month TTP arrangement allowing the business time to recalibrate.
Further information on the Plastic Tax can be found here.
For any advice on managing large debts, get in touch with the team on 0161 835 1900 or debt.advisory@leonardcurtis.co.uk.
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