The Plastic Packaging Tax and Extended Producer Responsibility: What They Mean for UK Businesses

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The UK government has introduced two key policies to tackle plastic waste and boost recycling rates: the Plastic Packaging Tax (PPT) and Extended Producer Responsibility (EPR). These policies will change how UK businesses manage their packaging, from design to disposal.

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These policies aim to:

1. Encourage businesses to incorporate recycled materials in their packaging
2. Make packaging easier to recycle
3. Hold companies responsible for the entire life cycle of their packaging

These policies clearly indicate that the UK government considers packaging that has recycled content and can be recycled the most sustainable choice, and they have backed up this position with financial incentives and penalties.

These policies will likely become stricter over time. By embracing these changes, your business will not only comply with regulations but also contribute to a more sustainable future.

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In the following sections, we'll break down how these policies work together and what specific steps your business might need to take.

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What is the Plastic Packaging Tax?

The PPT came into force on April 1st, 2022 in the UK. This tax aims to encourage more use of recycled plastic in packaging by taxing packaging with less than 30% recycled content.

• Purpose and Goals:
  • The tax seeks to incentivize businesses to use more recycled plastic in their packaging, thereby reducing reliance on new plastic. It also aims to encourage better waste management practices and support the recycling industry for plastic packaging.
• Scope and Applicability:
  • The tax affects businesses that manufacture or import 10 tonnes or more of plastic packaging in a year.
  • Businesses meeting this threshold must register for the tax and submit quarterly returns to HMRC, including the percentage of recycled content that their packaging contains.
• Cost Structure:
  • The tax stands at £217.85 per metric ton of plastic packaging containing less than 30% recycled plastic, an increase from the original rate of £200 per metric ton. The UK government has not announced when the rate might change again.

To put this into perspective:

10 tonnes is roughly equivalent to 416,667 1-litre Coca-Cola bottles According to import data from 2023, 3.43 million metric tonnes were imported into the UK of this size alone, which would equate to £74,722,550 in tax.

What is Extended Producer Responsibility?

The EPR scheme requires “producers” to bear the full cost of managing the waste their products generate. This policy aligns closely with the PPT but extends its reach to ensure that producers take accountability for where their packaging ends up.

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Who are producers?

‍The EPR defines producers as “entities that place products onto the market.”

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In most cases, both the packaging supplier and the business that uses the packaging qualify as producers.

• Purpose and Goals‍
  • The regulation shifts recycling costs from taxpayers to packaging producers, with the aim of encouraging the use of recyclable packaging and improving funding for recycling infrastructure.

• Scope and Applicability
  • This regulation affects UK organizations that handle or supply packaging.
  • There are two main thresholds for compliance:
    1. Reporting RequirementsOrganizations with an annual turnover of £1 million or more and handling/supplying over 25 tonnes of packaging per year must:
       • Submit annual data about empty packaging and packaged products handled and supplied within throughout the UK market.
       • Register for the EPR packaging online service.
       • Submit annual packaging data reports starting from 2024.
    2. Full Compliance RequirementsOrganizations with an annual turnover of £2 million or more and handling/supplying over 50 tonnes of packaging per year, in addition to the above, must:
       • Report packaging data every 6 months.
       • Pay for the full net cost of managing packaging at the end of its life.
       • Purchase Packaging Waste Recycling Notes (PRNs) or Packaging Waste Export Recycling Notes (PERNs) to meet recycling obligations.
• Additional Points
  • Full implementation of packaging EPR will happen in 2025, with payments to local authorities starting in October 2025.
  • All affected businesses, regardless of size, may need to submit “nation data” about which country in the UK their packaging has been sold, hired, or loaned in.
  • The 2023 data for nation data will need to be submitted by December 2024.

The PPT encourages using recycled materials by taxing packaging with less than 30% recycled content.

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The EPR encourages creating recyclable packaging by making businesses pay for the  unrecyclable packaging they generate.

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Why are these schemes good?

These schemes target large businesses to drive systemic change towards using recycled and recyclable plastic packaging. They also demonstrate the government's commitment to improving waste infrastructure and reducing plastic pollution, which revenue from these incentives will fund.

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Implications for Different Types of Plastic Packaging

The introduction of PPT and EPR schemes has far-reaching consequences across the packaging industry. While these regulations aim to reduce plastic waste overall, their impact varies significantly depending on the type of packaging in question. Let's examine two categories that face distinct challenges and opportunities under the new regulatory framework:

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1. Flexible Packaging‍

Currently, flexible packaging presents a series of unique challenges for recyclers globally, often limiting its recyclability to designated drop-off points. However, with the introduction of PPT and EPR, the UK aims to make all flexible plastics acceptable in kerbside recycling streams by March 2027. This marks a major leap forward in building a functioning circular economy.

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2. Compostable Packaging‍

Current legislation does not distinguish between renewable and recycled content, nor does it include composting as a type of recycling.  Both conventional plastics and those designed for composting fall under the same regulations, despite their differing environmental impacts. This uniform treatment has led to backlash and confusion  from environmental advocates and industry innovators alike.

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The situation for compostable packaging in the UK is not static.

• Infrastructure Development: Efforts are ongoing to improve composting infrastructure and increase composting rates.
• Policy Evolution: As understanding of different packaging materials grows, policies will likely adapt to better accommodate compostable options, especially in the case of products and industries with high levels of contamination, like takeaway food packaging.
• Market Adaptation: Businesses and consumers increasingly recognise the impact of packaging, driving demand for compostable alternatives.

While compostable packaging currently faces regulatory challenges in the UK, it remains an important option in the sustainable packaging landscape. Its unique properties and potential for environmental benefit may justify the premium cost for certain applications and environmentally conscious brands.

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The future of packaging compliance:

These policies mark the beginning of a shift in the UK’s packaging landscape.

The government has not specified a timeline for changes to these measures, or potential replacement schemes. However, the recycled content requirement and the consequences for non compliance will likely become stricter and apply to more businesses as recycling infrastructure improves.

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European Trends

‍While the PPT and EPR apply specifically to the UK, similar policies have emerged or progressed across Europe:

Additionally, although a unified EU plastic tax does not exist, the European Union introduced an "own resource plastics contribution" in 2021. This requires each Member State to contribute based on their non-recycled plastic packaging waste, calculated at €0.80 per kilogram.

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These measures suggest a broader European trend towards using fiscal policies to reduce plastic waste, promote recycling, and invest in recycling infrastructure.

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US Developments

Similar legislation has gained traction over in the US as well:

• California, Oregon, Colorado, Maine, and Minnesota have passed EPR laws for packaging. Other states like Washington, Illinois, New Jersey, New Hampshire, and Rhode Island will likely implement EPR legislation by the end of 2024.
• California's "Bottle Bill" requires plastic beverage containers to contain 15% post-consumer recycled (PCR) content, increasing to 50% by 2030.
• Washington state requires 15% PCR content for plastic packaging sold in the state as of July 2023.

What packaging material should I choose?

When we make choices about the best packaging for our customers, we look at the entire supply chain - from raw materials to the end of life treatment in their key region. This is why when we are asked what the most sustainable packaging material is, we always say “it depends.”

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However, the UK government has a clear goal: they want to support recycled and recyclable packaging, along with the waste management systems that go with it.

While only large businesses will feel the financial burden of these schemes initially, they will also set the standard for what sustainability means for plastic packaging in the UK. At the end of the day, the most sustainable choice will be the one that gets the most support from the government, and the highest uptake from it’s citizens.

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Top line advice:

By understanding and adapting to these policies, your business can not only avoid penalties but also position itself as a leader in sustainable practices. Embracing these changes can enhance your brand's reputation and appeal to increasingly environmentally-conscious consumers.

1. Incorporate as much recycled content as you can - without compromising the functionality of your packaging. The PPT currently has a 30% threshold, but this will likely increase as recycled content becomes more readily available and recycling infrastructure improves.
2. Design your packaging for recyclability. Aligning with recycling requirements is the best way to ensure that your business avoids unnecessary costs, and that you are in line with the requirements of future sustainability legislation.

How can Grounded help?

Grounded offers innovative, sustainable packaging solutions tailored to your needs:

• Industry-leading recycled content for food applications:
  • We source certified food-safe, recyclable LDPE with up to 80% post-consumer recycled content - the highest percentage available in the market.
  • We can also source 100% post consumer recycled PET, 100% ocean bound recycled PET, and 95% recycled lidding films for food applications.
• Ocean-bound and fully recycled options for non-food applications: We provide 100% recycled ocean-bound films and 100% post-consumer recycled films for e-commerce packaging.
• Future-proofed materials: Our products align with emerging legislation trends, ensuring your packaging remains compliant and sustainable in the face of evolving regulations. Outside of plastics we also have recyclable, high barrier papers for pouches, trays, and cups.
• Customized solutions: We work closely with you to find the best sustainable packaging options that meet your specific requirements and environmental goals.

Grounded’s mission is to make sustainable packaging simple, accessible, and transparent. We aim to accelerate the transition to a circular economy by empowering businesses to use recycled and bio-based materials that can be recycled or composted at end-of-life.

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Grounded's B Corp certification is a testament to our values. We believe in business as a force for positive change, balancing profit with purpose. We hold ourselves accountable to rigorous standards, ensuring our actions create lasting value for all stakeholders, including our employees, customers, community, and the environment.

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You can find out more about these schemes through the links below:

• Plastic Tax
• EPR Overview
• Flexible Plastic Recycling trials
• Government information on EPR legislation
• Plastic Packaging Tax Reforms - What about bio based plastics?

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Design your packaging on Blueprint today:

https://www.groundedpackaging.co/blueprint

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