The Plastic Tax and How To Combat It in April '22

A Message From the Ultrimax Managing Director on the Plastic Tax changes incoming April 2022

We are writing to you due to the unstable economic environment in the world today, bringing many challenges to our industry. We touch on some of our challenges below:

Plastic tax: As you are probably aware, HMRC are placing a tax on plastic packaging on any goods with less than 30% recycled plastic content, as an incentive to drive a demand for recyclable material and divert unnecessary waste away from landfill and incineration. The tax will come into force on 1^st April 2022 and will be charged at a rate of £200 per tonne. As a result of this, product affected by the tax will increase, such as our Plastic Mixing Cups.

Ukraine: Russia’s invasion of Ukraine has created a major challenge, with increased cost of raw materials highly likely to happen. With oil prices being reported at a 14-year high and cutting imports from Russia, this has led to supply chain issues, therefore getting materials such as oil and metals will be costly as Russia and Ukraine are big suppliers of metals and other commodities.

Fuel price/Transport issues: There continues to be so much uncertainty in the economy and carrier companies are now experiencing high levels of inflation (with the Government advising this may peak at 7% in the summer). Additionally, there are several issues we are facing, such as:

• Reduced vehicle availability but with an increase in vehicle costs
• Key service items and supply of other vehicle replacement parts being delayed due to supply issues in the Far East
• Replacement tyres have supply issues limiting availability and increasing costs
• Driver shortages are still ongoing.

The above are only a few of the issues our carriers are facing, but all leads to key costs increasing by as much as 20-30%.

As well as transport issues, we are also faced with the fuel prices escalating due to the oil price surge. This has resulted in carrier companies applying surcharges more than 15% to cover the rising fuel costs.

Container costs: Since the Covid pandemic, the Global supply chain issues remain unstable, with the Russian invasion of Ukraine adding to this. Therefore, containers and ships are being diverted, leading to container shipping costs going from $2k per 40ft container to $15k and these costs are still predicted to increase further. This has made importing of certain goods extremely costly, making us look elsewhere for suppliers, meaning a slight cost increase in the goods.

Our Strategy: To reduce these increases as much as we can, we have raised our stock levels by 80% already this year and are continuing to hold prices where we can for our customers. Nevertheless, as the situation continues to be unpredictable, replacement stock on some items are coming in at a higher cost than our currently selling price. Despite this, we are always ensuring stock availability at the best price possible.

Please check the prices on our order confirmation after placing orders for any changes in costs.

If you have any concerns or queries, please do not hesitate to contact me and I'd be happy to work with you and your company to traverse any challenges together.

The Chancellor's Budget - Inflation and Poential Stagflation Not Seen Since 1975!

Inflation

• The day began with an ONS announcement on inflation rates. The headline CPI rate rose from 5.5% in January to 6.2% in February. However, buried in the other data we see that Producer Price Inflation showed output/factory gate inflation at 10.1% (17.9% for chemicals), and input/raw materials at 14.7% (18.3% for chemicals).
• In his statement, the Chancellor pointed to the Office for Budget Responsibility forecast that inflation would reach 7.4% by the end of the year. He said the forecasts showed inflation would be ‘back under control’ by 2024.

National Debt

• In the next financial year, the OBR forecasts £89 billion being paid in debt interest!
• However, the UK debt is set to fall from 83.5% of GDP to 79.8% by 2026/27.

Energy

• While there was no additional direct help for energy bills, the Chancellor announced 0% VAT will be charged on ‘energy saving materials’ such as solar panels and heat pumps.
• Fuel Duty will be cut by 5p a litre until March next year.

Personal taxes

• The National Insurance threshold will rise to £12,570, with a claim this will represent a £330 tax cut for 30 million employees.
• Before the end of this Parliament (Dec 2024) the basic rate of Income Tax will be cut from 20p in the pound to 19p. Again, the claim is this will be a saving for 30 million people.

Business taxes

• Employment Allowance will be increased to £5,000 which the Chancellor says will be a ‘tax cut of up to £1,000 a year’ for 500,000 small businesses.
• There were then a series or more general promises to reform other businesses taxes in future:
  • A review of the Apprenticeship Levy to check it is ‘doing enough.’
  • A reform of the generosity of tax credits on private sector R&D.
  • A cut to tax rates in business investment, with details to be announced in the Autumn Budget.

Kind regards

Giles Hoare

Ultrimax Managing Director

e: sales@ultrimaxcoatings.co.uk

Other Reading You May Be Interested In

Why Are Prices Rising In The Paintshop ? - View Article