The UK Government is assessing the impact of the Plastic Packaging Tax (PPT) as the latest HM Revenue & Customs (HMRC) figures show a fall in both tax receipts and the volume of packaging subject to the levy.
HMRC collected £250m from PPT in the 2025-26 financial year, down 4% from £261m a year earlier. The latest data also show that 37% of plastic packaging manufactured in or imported into the UK was declared taxable in 2025-26, compared with 41% in 2022-23.
The figures show that less plastic packaging is being declared taxable, but they do not establish why that change has occurred.
Determining whether PPT has changed business behaviour – rather than the shift resulting from other regulation, market conditions or customer requirements – is therefore an important issue for the Government's evaluation.
Led by HMRC with input from HM Treasury, the evaluation is intended to assess whether PPT is meeting its policy objectives, its impact on businesses and any unintended consequences.
PPT came into force on 1 April 2022. It applies to finished plastic packaging components containing less than 30% recycled plastic, including packaging manufactured in the UK and imported packaging.
Businesses generally need to register if they expect to manufacture or import at least 10 tonnes of finished plastic packaging components in the next 30 days, or have manufactured or imported at least 10 tonnes during the previous 12 months.
The current tax rate is £228.82 per tonne, effective from 1 April 2026.
Businesses that meet the registration threshold must register even if all their packaging contains at least 30% recycled plastic. However, packaging that meets the recycled-content threshold is not subject to the tax.
The policy was designed to provide an economic incentive for businesses to use more recycled plastic in packaging, creating greater demand for the material and supporting increased recycling and collection of plastic waste.
HMRC's latest statistics show a continuing decline in the amount of plastic packaging declared taxable since PPT was introduced.
In 2025-26, 1.107 million tonnes of plastic packaging were declared taxable. This compares with 1.194 million tonnes in 2024-25 and 1.399 million tonnes in 2022-23.
The taxable share of total plastic packaging also fell, from 41% in 2022-23 to 37% in 2025-26.
Of the total tonnage reported in 2025-26, 51% met the threshold of at least 30% recycled plastic. A further 11% was exported, intended for export or converted, while less than 1% was exempt because it was used for the immediate packaging of human medicines.
There were 5,142 businesses registered for PPT as of 13 August 2026.
The figures are consistent with the type of behavioural change PPT was designed to encourage, but they do not demonstrate that the tax caused the decline in taxable packaging.
Other factors, including changes in packaging design, customer requirements, material markets and wider environmental regulation, may also have influenced the figures.
The Government announced in April 2023 that it would evaluate PPT, with HMRC publishing an evaluation plan in December that year.
The evaluation is intended to assess whether the tax is achieving its policy objectives and examine its wider effects, including unintended consequences, customer experience and the impact on businesses.
HMRC plans to draw on tax administration data, existing surveys and, where necessary, externally commissioned research. The work may also involve businesses affected by PPT, waste management companies, reprocessors, industry representatives and other experts.
A key challenge will be separating the effect of PPT from other changes affecting the packaging market.
HMRC's evaluation plan says several years of data are needed to build a complete picture of the tax's impact. Subject to sufficient data being available, the plan envisaged interim reporting before the evaluation concludes in 2026.
The evaluation plan also makes clear that newer policy developments are outside its scope, including changes relating to chemical recycling and the adoption of a mass balance approach.
Separate from the evaluation, the Government is introducing new rules for chemically recycled plastic from 1 April 2027.
Businesses that want to account for chemically recycled plastic in their PPT returns will have to use a mass balance approach.
Mass balance allows the proportion of chemically recycled plastic in a mixture of recycled and virgin plastic to be attributed to plastic packaging components. The approach is designed for circumstances where virgin and chemically recycled sources cannot be distinguished in the final output.
Using mass balance will be optional. However, businesses that do not use it will have to treat chemically recycled plastic as non-recycled, or virgin, plastic for PPT purposes.
The Government said the measure is intended to create the right fiscal conditions for investment in the emerging chemical recycling sector and support innovation in the UK plastics industry.
Pre-consumer plastic waste will also cease to qualify as recycled content for PPT purposes from 1 April 2027.
Businesses using mass balance will need to use a certification scheme that meets HMRC's minimum requirements.
Guidance published on 28 August 2026 says relevant businesses must operate a site-level mass balance system with a three-month accounting period and no negative balance at any point.
They will also need to retain a valid certificate, attribution declarations for each batch of material and any required site-specific mass balance records. Records must be kept for six years.
The requirements extend through the relevant supply chain. Businesses handling material from the point at which plastic waste enters the chemical recycling process through to the manufacture of the finished packaging component must be appropriately certified.
Businesses receiving material must also check that suppliers are correctly certified and that attribution declarations are complete.
Importers of finished packaging do not themselves need to be certified solely because mass balance has been used, but they will need evidence that the relevant supply chain was certified and that the chemically recycled material was correctly attributed.
HMRC has said more detailed guidance will be published in early 2027.
The requirements place greater emphasis on traceability and documentation. Companies seeking to account for chemically recycled plastic will therefore need evidence not only from their own operations but from relevant businesses across the supply chain.
Mechanical recycling could also face new certification requirements.
HMRC consulted in 2026 on the potential introduction of mandatory certification for plastic packaging containing mechanically recycled plastic.
The consultation examined possible changes to evidential requirements, concerns about fraudulent recycled-content claims, potential impacts on businesses and how a certification requirement could operate.
The consultation closed on 10 August 2026. HMRC said it would analyse the responses and publish a formal response in due course.
No final decision on mandatory certification for mechanically recycled plastic had been announced at the time of writing.
If introduced, the measure could increase the evidence and verification requirements for manufacturers and importers seeking to demonstrate that packaging contains sufficient recycled plastic for PPT purposes.
The fall in taxable packaging volumes is an important development for companies affected by PPT, but it should not be interpreted as proof that the tax alone has changed packaging behaviour.
The Government's evaluation is intended to examine that question in more detail and assess the wider effects of the tax on businesses and the packaging market.
At the same time, companies face more immediate compliance changes.
From April 2027, businesses seeking to account for chemically recycled plastic will need to meet the mass balance and certification requirements. The removal of pre-consumer plastic waste as a source of recycled content will also affect PPT calculations.
Companies using mechanically recycled plastic will need to monitor the Government's response to its consultation on possible mandatory certification.
For packaging businesses, the direction of travel is towards greater scrutiny of recycled-content claims. Meeting PPT requirements will increasingly depend not only on the materials used, but on the ability to verify, trace and document recycled content through the supply chain.
The Government's evaluation will address the broader question: whether PPT itself has delivered the behavioural change it was designed to achieve.
"UK Plastic Packaging Tax under scrutiny as taxable packaging volumes fall" was originally created and published by Packaging Gateway, a GlobalData owned brand.