HMRC scraps plans to add a £200/tonne tax to silage wrap

The UK Treasury has confirmed that the plastic film used by farmers and crofters to produce silage bales will continue to be exempt from the plastic packaging tax (PPT).

In an apparent change to its former position, HMRC issued guidance in December listing silage wrap as ‘packaging’ for the first time, putting it in scope for the PPT, which would have added an extra £200/tonne from April 2022.

After lobbying from the NFU, NFU Scotland, NFU Cymru and other stakeholders, key MPs received a briefing on the issue ahead of a debate in Westminster Hall last week.

Amber Valley MP, Nigel Mills, said the proposed reclassification had come at short notice. “Industries have not prepared for it and the costs will fall directly on farmers at a very difficult time,” he said.

He added that while nobody would argue against the aims of the new tax, its application in this case risked undermining voluntary recycling efforts by many farmers, who have been paying around £60 per tonne for used wrap collection. Adding extra costs could reduce participation in such schemes, he said.

It has now been accepted by the Treasury that, whilst silage film falls within the scope of the packaging tax, it is a highly specialised product, the primary purpose of which is to enable the fermentation process needed to produce the silage. That is a ‘non-packaging function’ making it eligible for exemption.

HMRC is set to publish updated guidance to reflect this position shortly.

NFU Scotland’s environmental resources policy manager Sarah Cowie said: “We welcome this decision that properly recognises the integral role that plastic wrap plays in the production of silage. With input prices soaring, avoiding a taxation cost of £200 per tonne of wrap is also very welcome at this time.

“Appropriate alternatives to plastic wrap have yet to be developed but farmers and crofters remain committed to farming in the most environmentally friendly way. That sees widespread industry uptake of the schemes already available to collect silage film from farms, crofts and collection centres and recycle it.

“More widely, NFU Scotland would like to see support for research and development of affordable and technically suitable silage films for the future produced with more recycled plastic content or produced from alternatives to plastic.”