UK government announces Plastic Packaging Tax increase to incentivize recycled content

24 Nov 2023 --- As part of the Autumn Statement on changes to tax, welfare and public spending, the UK government has unveiled plans to further incentivize the use of recycled plastic in packaging through an increase in the Plastic Packaging Tax.

As of April 1, 2024, the rate will be raised in line with the Consumer Price Index, reaching £217.85 (US$273.38) per ton. The tax was introduced in April 2022 as part of the government’s Resources and Waste strategy, aiming to encourage businesses to use recycled plastic in packaging and reduce plastic waste.

“Anecdotally, a common message from industry concerning the tax is that there has not been a notable uptake in recycled content since implementation in April last year,” Louisa Goodfellow, Ecosurety’s policy manager, tells Packaging Insights. 

“Domestic packaging manufacturers and importers liable to pay the tax are likely simply absorbing the cost and passing it on to their customers. This may also be due to a lack of secondary recycled material on the market and that reprocessed plastic available for use in manufacturing can be more costly than the virgin equivalent.” 

“The announced increase in the per ton cost of the tax may eventually start ensuring the tax has the desired effect and provide a financial incentive to use more recycled content, but not until complementary packaging policies (such as Simpler Recycling in England and EPR for packaging) increase the availability of secondary material via increased recycling rates,” she says. 

Goodfellow says the tax might have the desired effect but not until complementary packaging policies increase availability of secondary material.Goodfellow further illustrates that it would also be helpful if the money raised from the tax were “hypothecated and reinvested into UK reprocessing infrastructure, which under current plastic packaging tax legislation is not the case.”

“Clear economic incentive”
The government also plans to publish an evaluation plan by the end of the year, considering the introduction of an escalator to the tax rate and a minimum recycled plastic threshold in the future.

The measure is expected to impact UK plastic packaging manufacturers, importers, business customers and consumers. However, there is an exemption for manufacturers and importers producing less than ten tons of plastic packaging per year.

The Plastic Packaging Tax increase aligns with the government’s ambition to eliminate avoidable plastic waste by 2042, encouraging recycled plastic in packaging and diverting plastic from incineration or landfill. The operational impact on businesses and individuals is anticipated to be minimal, with the government predicting no significant economic consequences.

The measure will be closely monitored through information collected from tax returns and receipts, ensuring its effectiveness in achieving environmental and economic goals.

“The aim of the tax is to provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, which will create greater demand for this material. In turn this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration,” explains the UK HM Revenue & Customs.

“Increasing the rate of Plastic Packaging Tax in line with CPI maintains the real terms value of the price incentive to use recycled plastic and supports the government’s environmental goals.”

By Radhika Sikaria