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Author's profile photo Marc Nagtegaal

Plastic Tax UK within SAP S/4HANA Recycling Administration

Plastic Tax UK and UK Packaging declaration within SAP S/4HANA Recycling Administration

UK companies are subject to the Producer Responsibility regulations. They must report the packaging material used by material type and weight and pay a fee to meet their obligations under the legislation. The cost depends on a market-based system which is volatile. For instance, plastic costs per ton ranged from £8 to £350 in 2020.

Customers can also request data concerning the packaging that a vendor supply them so they can accurately calculate their own obligations.

This following Link will guide you to the governmental page for the Packaging waste producer responsibilities.

But now a new legislation comes up: This is the so called Plastic Tax.

So additionally, to the producer responsibility packaging report, the UK Government has announced that a brand-new tax is being introduced in the UK.  From April 2022 this new tax will apply to all Plastic Packaging components manufactured in or imported into the UK that contains less than 30% post-consumer recycled (PCR) content.  Each individual Packaging component (pail, lid, handle etc.) must be considered separately.  The rate has been confirmed at £200/metric tonne and it will not apply to any plastic packaging which contains ≥30% post-consumer recyclate (PCR), or any packaging which is not predominantly plastic by weight.

Exports are exempt unless the plastic packaging is in use as transit packaging to export products out of the UK.  As such UK based packaging suppliers may request data concerning the export of packaging that they supply Customer UK so that they can claim the export credit.

According to the government guidance all businesses that manufacture or import plastic packaging must keep a record of the packaging they purchase or import. Records must be kept even if we do not need to register for the tax. This is so we can demonstrate to HM Revenue & Customs (HMRC) that you do not need to register and to help us understand when we may become liable to register or pay the tax. The records must show the:

  • total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging, excluding packaging which is used to transport imported goods
  • data and calculations used to determine if a packaging component is, for the most part, plastic and how much recycled plastic it contains
  • weight of exempted plastic packaging and the reason for the exemption.
  • amount in weight of plastic packaging exported, and therefore the allowed relief from the tax

 

A plastic packaging component is assumed to fall within the tax requirements unless it is shown that it does not.

Please find more information in the embedded links below, where you will be guided to the official Plastic tax websites.

Here you will find all detailed and updated information regarding Plastic tax UK:

Policy Paper (20th July 2021) – Link

Legislation (Part 2 of the Finance Act 2021) – Link (See point 42 onwards)

Guidance (Updated 7 February 2022) – Link

 

Plastic Tax System Solution within SAP S/4HANA Recycling Administration

SAP REA offers a manageable implementation of this legal requirement. SAP REA customers can extend their current setup with a new partner configuration.

  • Direct packaging quantity flow determination from SAP ERP or S/4 for Local Sales, Imports, Local Purchase, Exports via customized REA datafilter from SAP Sales und Material Documents out of the box.
  • Storage of packaging master data for recycled content in SAP REA Database tables.
  • Supports declaration process per fraction weight, recycled content in %.
  • Supports declaration process per SKU and its fraction weight, recycled content in %.
  • Easy setup with a new Recyclingpartner (legal vendor organization) for existing REA customer mostly out of the box.
  • Mass change Tools to adapt new master data.
  • Other countries solutions for Plastic Tax like Spain and Italy are in preparation.

 

Summary

The UK Government has announced a brand-new tax is being introduced in the UK from April 2022.  This is the so called the Plastic tax. Within SAP S/4HANA Recycling Administration you will find a manageable solution to deal with the new legal requirement. For existing SAP REA customer it is a straightforward extension of the current setup.

For more information, additional questions and to explain how the solution could work in your system environment you can contact me or send a comment on our blog https://answers.sap.com/tags/01200615320800000611

Thanks and regards

Marc Nagtegaal

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      2 Comments
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      Author's profile photo Olaf Steinrücken
      Olaf Steinrücken

      Hi Marc,
      thanks for this interesting blog.
      I thought that preparation and declaration for UK plastic tax would be covered by SAP Responsible Design and Production (RDP).
      As I cannot find any comment on SAP RDP in your blog I assume that there have been some changes.
      Can you please explain how SAP RDP and SAP REA are related to each other?

      Thanks in advance

      Olaf

      Author's profile photo Marc Nagtegaal
      Marc Nagtegaal
      Blog Post Author

      Hello Olaf,

      Yes you are right, UK Plastic tax is covered by SAP Responsible Design and Production (RDP) and comments will be published soon, I think.

      This blog so far shows only the SAP REA capabilities and learnings from other customer projects which uses REA already.

      Thanks and regards

      Marc