Plastic packaging tax to increase from April 2025

PPT was introduced in 2022 and applies to plastic packaging containing less than 30% recycled plastic manufactured and imported into the UK, to encourage businesses to use recycled materials in their production processes. Those meeting the threshold to register for PPT must pay tax and report the amount of plastic packaging to HMRC.

Professor Andrew Dove, Professor of Chemistry at the University of Birmingham said: “[PPT] is meant to help deal with plastic pollution by providing an incentive to use more recycled plastic and hence reducing the demand on virgin fossil-based plastics.”

Since it’s introduction, there has been an increase in the volume of plastic packaging containing 30% or more recycled plastic, Dove stated. “However, the tax has faced challenges… including external factors such as pricing (including competition with low-cost virgin materials) and inadequate supply of recycled content as well as challenges with compliance and verification,” he explained.

The change was announced in the Budget alongside publication of the government response to an industry consultation on how to recycle plastic packaging; it confirms a mass balance approach (MBA) to calculating the recycled content in chemically recycled plastic for the purposes of the tax.

However, when this comes into effect is yet be determined; the government will undertake further technical engagement before confirming and publish draft legislation for technical consultation. 

Rachel Stonehouse, Head of Policy at the Institute of Materials, Minerals & Mining (IOM3), said:

“This clear policy direction is key to unlocking further investment in recycling infrastructure and transitioning to a more circular economy.”

Helen Jordan, Sustainability Manager at British Plastics Federation (BPF), commented: “The BPF is pleased that the government have noted the key points made within their response on how to ensure investment in chemical recycling takes place within the UK. The key outcome of the consultation is that a mass balance approach with a fuel use exempt allocation method will be allowed within the PPT.”

Additionally, pre-consumer waste will stop being classed as recycled plastic for PPT purposes, closing a loophole that gave some businesses an unfair competitive advantage, while the exemption for the immediate packaging of licensed human medicines remains in place.

Jordan added: “The reclassification of pre-consumer for the purpose of the PTT will be difficult to navigate and will need some serious investment in the recycling infrastructure in the UK. The reinvestment of the money from the PPT back into recycling infrastructure in the UK would help to achieve this.”

Dove’s work, however, suggests: “We need to address the problem of plastics pollution from a systemic perspective, considering better taxation methods but also other measures outside of taxation, including end-of-life targets to reduce landfill and incineration, stronger regulation of biodegradable and compostable claims, driving decisions on substitution and use based on sustainability metrics, looking at end-of-life licensing to promote more recycled content, and solutions that work from the start of the value chain, addressing sustainable plastics at the source.”