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From April 1, 2022, the Department of Agriculture, Environment and Rural Affairs (DAERA) will increase the carrier bag levy to 25 pence for all bags priced at £5 or less.

In new moves to further protect the environment and encourage consumers to reuse their carrier bags, the levy will apply to all new carrier bags with a retail price of below 20 pence. The new levy will not just apply to plastic bags but will be applicable to all carrier bags made of all materials, such as paper. The new proposals state the levy will be applicable when you buy good such as groceries or clothing, and when goods are delivered and sent in carrier bags.

Retailers must be responsible to charge customers the 5 pence levy and ensure the net proceeds of the levy are paid directly to DAERA, every quarter. Retailers set the price of their bags which means that prices may vary. However, only the proceeds of the 5p levy are paid to DAERA. In addition to this, retailers must:

  •  declare the number of carrier bags they have given out for which they only charged the 5p levy
  •  declare the number of carrier bags they have given out for which they charged both the 5p levy and their own retail price of less than 20p
  •  make the associated payment to DAERA within 28 days of the end of the quarter

However, there are situations where the levy does not apply, such as:

  • contain take-away hot food and hot drinks
  •  only contain items such as unpackaged food, seeds and bulbs, axes, knives or razor blades, goods contaminated by soil and some medicinal products
  •  are used when you buy a service, such as shoe repair or laundry
  •  are of certain sizes and used only to contain packaged uncooked meat or fish
  •  are certain types of small bags
  •  are specialist bags, such as mail order and courier bags
  •  are supplied for free to replace worn out ‘bags for life’
  •  are carrier bags with a retail price of 20p or more

 

VAT does not apply if you only charge the levy, so the full 5p per bag should be paid to DAERA. However, If you add your own charge on top of the levy, the full amount is considered inclusive of VAT. For example, if you charge 7p on top of the levy, then the total amount (12p) is inclusive of VAT. The total VAT in this case would be 2p. 0.83p of this relates to the levy, with 4.17p per bag payable to DAERA.

When you send in your quarterly return, the system will calculate the amount to be paid to DAERA. VAT proceeds should be paid to HM Revenue & Customs in the normal way.

For more information, visit www.nidirect.gov.uk/articles/carrier-bag-levy#toc-3

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