Plastic Packaging Tax: The next wave of change is coming

Introduction

The UK's Plastic Packaging Tax (PPT) continues to reshape how businesses approach their packaging decisions. Yet many businesses still find themselves grappling with their EPR obligations, and in particular, plastic packaging tax rates, and recycled content requirements.

Recent government statistics reveal that PPT revenue dipped by 3% to £259 million[2] in 2024-25, while the proportion of taxable packaging fell from 42% to 38% year-on-year. These figures tell a compelling story: businesses are increasingly adopting recycled content strategies. However, the packaging regulations landscape remains challenging to navigate, and is soon set to change.

With 4,927 registered businesses[3] now subject to PPT requirements and potential threshold adjustments on the horizon, understanding your obligations has never been more critical. This comprehensive guide will help you master PPT compliance and position your business for the circular economy, as well as future regulatory updates.

Understanding PPT: The fundamentals

The Plastic Packaging Tax, introduced on 1 April 2022, targets manufacturers and importers of plastic packaging containing less than 30% recycled content. The current tax rate stands at £223.69 per tonne (effective from 1 April 2025), representing a steady increase from the original £200 per tonne rate in 2022-23.

The registration requirements are straightforward in principle but require careful attention to timing and calculation methods. Your business must register for PPT if you manufacture or import 10 tonnes or more of finished plastic packaging components within any 12-month period.

Crucially, you must use the 12-month lookback rule calculated from the last day of each month rather than from 1 April 2022, which often catches businesses off guard during their initial assessments.

Exemptions and relief categories

Understanding your relief options can significantly reduce your tax burden. The primary exemption covers packaging containing 30% or more recycled plastic content. It’s a threshold that has driven remarkable industry transformation.

Export relief applies to packaging that's exported or intended for export within 12 months, providing crucial support for businesses serving international markets. Companies can get relief on exported and converted packaging in the same accounting period, or claim a credit for them on a later tax return.

Additionally, immediate packaging of human medicines receives exemption status, though this accounts for less than 1% of total tonnage across the industry.

Key statistic: 51% of UK plastic packaging now meets the 30% recycled content threshold, a significant achievement showing the tax's environmental impact.

Quarterly reporting requirements

For PPT reporting, you report to HMRC (His Majesty's Revenue and Customs), the UK's tax authority. But when does reporting take place?

PPT operates on fixed quarterly periods ending 30 June, 30 September, 31 December and 31 March. Returns must be submitted by the last working day of the following month, with payment due simultaneously. It’s a tight deadline that requires advance preparation.

What's particularly interesting is that government data reveals revenue is consistently 7% lower in the second half of each financial year compared to the first half, suggesting seasonal packaging patterns that businesses should factor into their cash flow planning.

What falls within PPT criteria?

Understanding exactly which packaging components fall under PPT scope remains one of the biggest compliance challenges. The tax applies to finished plastic packaging components, creating complexity around multi-material packaging and component-level assessments.

Manufacturing vs importing distinctions

The compliance burden differs significantly between manufacturers and importers. UK manufacturers must assess all plastic packaging components produced domestically, calculate their 12-month rolling production volume, and verify recycled content at the point of manufacture. This domestic focus provides greater control over documentation and verification processes.

Importers, however, face a more complex challenge. They must obtain recycled content certificates from overseas suppliers who may operate under different regulatory frameworks and definitions. This creates a documentation management challenge that spans multiple jurisdictions, requiring businesses to ensure overseas suppliers' recycled content definitions align with UK-specific requirements—a task that's often more complicated than it initially appears.

Boxout:

Common misconceptions

Myth: Only "primary" packaging is taxable

Reality: All plastic packaging components, including secondary may be subject to PPT

Myth: Biodegradable plastics are exempt

Reality: Biodegradable plastics are subject to (PPT) if they contain less than 30% recycled plastic content

Myth: All of my plastic packaging has at least 30% recycled content, therefore I do not need to report

Reality: You do not have to pay the Plastic Packaging Tax on your plastic packaging if it contains at least 30% recycled content. However, you must still keep accurate records, including supporting evidence for the recycled content, and the total weight of this packaging counts towards the 10-tonne registration threshold. If you manufacture or import 10 tonnes or more of plastic packaging in a 12-month period, you are required to register for the tax, even if some of it qualifies for an exemption

Current challenges and market realities

Despite PPT's environmental objectives, significant market challenges persist that complicate compliance efforts.

A major stumbling block is that virgin plastic remains persistently cheaper than recycled alternatives, creating ongoing economic pressure for businesses. This price differential undermines the tax's behavioural change incentives, particularly for price-sensitive sectors. Worryingly, recent industry analysis suggests that current plastic packaging tax rates may be insufficient to drive widespread adoption of recycled plastic, causing demand to drop.

At the same time, the UK's recycling infrastructure faces mounting pressures. Major recycling plants have shut down in the last three years, as collection, sorting, transport, energy and labour costs have made many facilities commercially unviable. Adding to these concerns, Plastics Recyclers Europe[1] warns of "imminent collapse" across the EU recycling sector.

Possible PPT changes ahead

 In view of the issues listed above, change is very likely imminent for PPT.

Government officials have signalled that updates could be announced in the 2025 Autumn Budget, with reforms likely to focus on tightening recycled content thresholds, introducing tiered relief for higher recycled content, and potentially escalating tax rates well above the current level.

Alongside this, new policy work is progressing on how chemical recycling is accounted for, which materials can be included in recycled content calculations, and tougher enforcement mechanisms.

At ERP UK, our view is that, for businesses, the compliance challenge is set to grow. Many already face difficulties sourcing reliable certification, and maintaining audit-ready records across multiple jurisdictions. With further changes expected, businesses should take a proactive approach: review supply chains, stress-test documentation systems, and prepare for more rigorous oversight.

The message is clear: businesses that act early will be better positioned when the next wave of PPT reform arrives.

Boxout

Essential Steps for PPT Compliance:

Success with PPT compliance requires systematic planning and ongoing attention.

Immediate Actions:

• Conduct comprehensive packaging audit (12-month rolling assessment)
• Establish robust data collection systems
• Implement proper due diligence procedures
• Set up quarterly reporting processes
• Maintain detailed compliance records

Strategic Planning:

• Evaluate recycled content options vs tax implications
• Build relationships with certified recycled content suppliers
• Monitor regulatory changes and potential updates
• Consider long-term packaging strategy alignment
• Plan for potential rate changes

How ERP UK simplifies PPT

As a leading expert in environmental compliance with over 700 clients across diverse sectors, ERP UK has developed comprehensive solutions that transform regulatory complexity into manageable processes.

We recognise businesses may not:

• Know the weight of packaging components for every product
• Know the material type of each packaging component
• Be able to evidence the plastic packaging’s recycled content
• Have the resource available to do this

In anticipation of Plastic Packaging Tax and related Packaging EPR reforms we have adapted our data collection methods and updated our weight database to allow businesses to outsource these to ERP.

ERP’s data services team will:

• Contact suppliers on your behalf and gather the required information quickly and efficiently
• Identify: in scope, out of scope, and exempt packaging
• Identify: what packaging has a recycled content of 30% or greater
• Confirm if you are under, meet or exceed the 10-tonne tax threshold
• For those currently under the threshold a tracking services is provided
• Determine your Plastic Packaging Tax liability
• Provide a bespoke report to accurately complete HMRC tax declarations
• Upon request of HMRC produce supporting evidence for all exemptions and recycled content declarations
• Identify suppliers which contribute the most to your liabilities for future targeted packaging improvement

Ready to simplify your PPT compliance?

Get your PPT health check and discover how ERP UK can streamline your regulatory obligations. Our packaging compliance experts will assess your current position, identify opportunities for improvement and provide clear recommendations for success.

Don't let PPT complexity hold your business back. Partner with ERP UK and focus on what you do best while we handle your compliance requirements with expertise, reliability and precision.

Contact our team today

Related services

Visit our Data Services webpage for more details on our PPT services

About ERP UK

To learn more about ERP UK and our services please visit our About page

Contact us today:

Telephone: +44 (0)20 3142 6452

E-mail: uk@erp-recycling.org

Follow ERP UK on LinkedIn here: