Plastic Packaging Tax: Rates, Rules & Compliance Guide

What Is the Plastic Packaging Tax?

The Plastic Packaging Tax is a levy on finished plastic packaging components manufactured in or imported into the UK that contain less than 30% recycled plastic by weight. It is not a tax on plastic generally – it applies only to packaging, and only to packaging that fails to meet the recycled content threshold.

The tax was designed to close the cost gap between virgin and recycled plastic, making recycled material commercially competitive and stimulating demand across the recycling supply chain. Since its introduction, it has had a measurable impact: HMRC data shows that 51% of UK plastic packaging now meets the 30% recycled content threshold – a significant shift from the pre-tax baseline.

The Plastic Packaging Tax is a separate obligation from the EPR for packaging disposal fees and the PRN/PERN system. Businesses subject to PPT may simultaneously be obligated under the Extended Producer Responsibility for packaging scheme – the two run concurrently and neither substitutes for the other.

The Legislation

The Plastic Packaging Tax is established by Part 2 of the Finance Act 2021 (sections 43 to 84). The primary regulations made under the Act are the Plastic Packaging Tax (General) Regulations 2022 (SI 2022/117), which define key terms including the meaning of “finished” plastic packaging components, recycled content measurement, and the conditions for exemptions.

The tax is administered by HM Revenue and Customs (HMRC) – not the Environment Agency – which is an important distinction from most other waste and packaging legislation. Compliance is a tax matter, not an environmental permit matter.

What Is a Finished Plastic Packaging Component?

A plastic packaging component is any article made predominantly from plastic, designed to be used as packaging. A component is considered finished when no further substantial modification is to be made to it – for example, when it leaves the production line or clears UK customs.

The Finance Act 2021 sets out when a component is treated as finished (section 47). Importantly, the person who performs the last substantial modification that results in a finished component is treated as the manufacturer – even if another party originally produced the plastic. This has implications for converters and processors who add printing, cutting, or forming steps to semi-finished packaging materials.

The tax applies to all forms of plastic packaging, including:

• Bottles, tubs, trays, and containers
• Films, bags, wrapping, and pouches
• Lids, caps, and closures
• Labels (where plastic is the predominant material)
• Composite packaging where plastic is the primary component by weight

Who Must Register for Plastic Packaging Tax?

Any business that manufactures or imports 10 tonnes or more of finished plastic packaging components in any rolling 12-month period must register for PPT with HMRC.

The 30-Day Registration Rule

Businesses must register within 30 days of the point at which they:

• Have manufactured or imported 10 tonnes or more in the previous 12 months, or
• Reasonably expect to manufacture or import 10 tonnes or more in the next 30 days

What Counts Towards the Threshold?

This is one of the most misunderstood aspects of PPT. A manufacturer of 100% recycled-content plastic packaging must still register if they handle 10+ tonnes – they simply won’t owe any tax.

Plastic Packaging Tax Rates

The PPT rate is updated annually in line with CPI inflation. It applies per tonne of plastic packaging that does not meet the 30% recycled content threshold:

The rate applies per tonne of chargeable packaging – that is, finished plastic packaging components with less than 30% recycled content, after deducting any exempt packaging and accounting for credits.

The 30% Recycled Content Threshold

The core of the tax is the 30% recycled plastic by weight threshold. Plastic packaging components that meet or exceed this threshold are not subject to the tax.

Recycled plastic content is measured by weight across the whole component. A bottle made of 35% recycled PET and 65% virgin PET would not be taxable. A film containing 25% recycled content would be.

What Counts as Recycled Content?

Currently, both post-consumer recycled plastic (recovered from products used and discarded by end consumers) and pre-consumer/post-industrial recycled plastic (manufacturing offcuts, rejects, and production scrap) count towards the 30% threshold.

Evidencing Recycled Content

Businesses must be able to evidence the recycled content of any packaging they claim meets the threshold. HMRC expects businesses to conduct due diligence – obtaining certificates, test reports, or supplier declarations confirming the proportion of recycled material. Relying on unverified supplier claims is not sufficient and exposes businesses to back-tax liability if claims cannot be substantiated.

Exempt Packaging

Four categories of plastic packaging are exempt from the tax:

1. Licensed Human Medicinal Products

Plastic packaging used as the immediate packaging of licensed human medicinal products (medicines licensed by the Medicines and Healthcare Products Regulatory Agency) is exempt. “Immediate packaging” means the container directly in contact with the medicine. This exemption does not extend to outer packaging.

Note: Exempt medicinal packaging still counts towards the 10-tonne registration threshold.

2. Permanently Set Aside for Non-Packaging Use

Plastic components permanently recorded as set aside to be used for a purpose other than packaging are exempt – for example, plastic film used to coat whiteboards or facilitate silage fermentation. HMRC expects this to apply to a very narrow category of highly specialised products. Evidence must be recorded before or as soon as the component is manufactured or imported.

Note: These components also count towards the 10-tonne threshold.

3. Transport Packaging on Imported Goods

Plastic packaging used to transport goods into the UK – such as pallet wrap, pallets, strapping, and freight containers – is exempt. This exemption covers tertiary packaging used in the delivery chain, not packaging used to wrap individual sales units.

Note: Transport packaging on exported goods does not qualify for this exemption and is subject to tax.

4. International Stores

Packaging used in stores on international aircraft, ships, or rail journeys is exempt. If such packaging is subsequently removed from stores and imported into the UK, it must be recorded and may become taxable.

Excluded Packaging (Not Plastic Packaging Components)

Some items are not treated as plastic packaging components at all – they fall outside the scope of the tax rather than being exempt from it:

• Integral to goods: Plastic components that are an integral and inseparable part of the goods themselves – such as printer cartridges, inhaler bodies, or water filter housings
• Long-term storage: Cases designed for long-term storage of goods, such as toolboxes, first aid boxes, or earphone cases
• Presentation and display: Display stands, shop fittings, and presentation equipment that form part of the retail environment rather than packaging for a product

Returns, Payment and Deadlines

Registered businesses must submit quarterly tax returns and make payment to HMRC. The quarterly periods are fixed:

Returns must be submitted and payment made simultaneously, by the last working day of the month following the quarter end. Returns are required even in quarters where no taxable packaging was manufactured or imported.

Tax Credits and Export Deferrals

Credits for Exported Packaging

If you have paid PPT on plastic packaging that is subsequently exported – either filled or unfilled – you can claim a tax credit on your next return. The credit offsets the tax already paid against future liabilities.

Deferrals for Packaging Intended for Export

If you manufacture or import taxable plastic packaging that you intend to export unfilled within 12 months, you can defer accounting for the tax on your return while the packaging remains in the UK pending export. If the packaging is not exported within 12 months, the deferred tax becomes due.

Record-Keeping Requirements

Businesses registered for Plastic Packaging Tax must retain records for 6 years from the date of submission of the relevant return. Records must include:

• The weight of all finished plastic packaging components manufactured or imported each quarter
• The recycled content of each category of packaging, including supporting evidence
• Details of any exempt packaging and the basis for the exemption
• The weight of any packaging exported and any credit claims made
• Any supplier declarations, test certificates, or other evidence of recycled content

HMRC has enforcement powers to inspect records and issue assessments where returns are found to be incorrect. Officers of a company can be made personally liable for unpaid PPT in cases of deliberate non-compliance.

Upcoming Change: Pre-Consumer Recycled Content (April 2027)

From April 2027, the definition of recycled plastic for the purposes of Plastic Packaging Tax will be narrowed. Pre-consumer recycled plastic – manufacturing offcuts, production rejects, and processing trimmings that are reintroduced into the production process before reaching a consumer – will no longer count towards the 30% recycled content threshold.

Only post-consumer recycled plastic (plastic recovered from products used and disposed of by end consumers, including material collected via household and business recycling schemes) will count.

This change has significant implications for manufacturers who currently meet the 30% threshold using in-house production scrap. Businesses relying on pre-consumer content to avoid the tax will need to either:

• Source genuine post-consumer recycled plastic to replace the qualifying proportion, or
• Accept PPT liability on packaging that falls below the threshold after the definitional change

Businesses should begin auditing their recycled content sources now to assess their exposure ahead of April 2027.

How PPT Relates to Other Packaging Obligations

Plastic Packaging Tax does not replace or offset any other packaging compliance obligation. UK businesses may simultaneously be subject to:

• Extended Producer Responsibility for packaging – disposal fees paid to PackUK on household packaging; a separate financial obligation from PPT, with different administration, scope, and payment routes
• UK Packaging Waste Regulations – PRN/PERN obligations for packaging placed on the market, which continue alongside both PPT and EPR
• Simpler Recycling regulations – requiring businesses to separate plastic packaging and other dry recyclables from general waste for separate collection

All four obligations can apply to the same business simultaneously. Understanding how they interact – and where the financial liabilities fall – is essential for any business involved in manufacturing, importing, or selling packaged goods in the UK.