Good news for farmers as HMRC scraps silage wrap tax

The government has scrapped plans to lump a £200/t plastic tax on silage wrap after intense lobbying by farm groups.

In a major win for farmers, HMRC has said that silage wrap will not be liable for the plastic packaging tax (PPT) that will come into force on 1 April 2022.

There was concern that silage wrap would for the first time fall within the definition of packaging despite its primary purpose being to ensure harvested grass can be fermented into silage.

See also: Government urged to scrap proposed plastic tax on silage wrap

The farm unions in England, Scotland and Wales, and other industry groups, challenged the decision and called for the exemption to continue.

In a letter to the NFU, the Treasury said: “Following further careful analysis, HMRC has confirmed that silage film falls under an exemption.

“Representations made by you and others have demonstrated that [it] is a highly specialised product, the primary purpose of which is to enable fermentation.”

At a recent Westminster debate, Nigel Mills, MP for Amber Valley in Derbyshire, urged the government to reconsider imposing the “seriously damaging” tax on farmers, who are already facing other spiraling input costs and increased market competition from abroad.

Welcome decision

Sarah Cowie, NFU Scotland’s environmental resources policy manager, 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/t 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.”

The farming industry has been keen to stress that it is strongly supportive of efforts to reduce farm plastics.

Farmers can choose to pay £60/t to have the wrap collected so it can be recycled, as part of an Agriculture Plastics Environment scheme.

There was concern that the PPT would jeopardise such schemes.

Mark Webb, chairman of the Green Tractor Scheme, the group that represents independent farm plastic collectors, said £200/t would add £5/roll to the cost of bale wrap.

“We are pleased and relieved the government has done a U-turn and it has been recognised that this form of plastic does not exist as a packaging in the way that other things do,” Mr Webb said.

NFU deputy president Stuart Roberts had called for a review of the tax after he noted that coffee pods and boil in the bag rice packets were exempt, despite often proving far harder to recycle and clear alternatives being available.