HMRC has told Packaging Gateway that PLA and other compostable plastics can fall within the Plastic Packaging Tax, while EN 13432 certification does not provide an exemption.
Compostable and biodegradable plastic packaging does not automatically escape the UK’s Plastic Packaging Tax (PPT), HM Revenue & Customs (HMRC) has confirmed to Packaging Gateway.
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In response to questions from Packaging Gateway, HMRC said switching from conventional plastic to compostable or biodegradable alternatives “does not, by itself, remove or reduce a business’s Plastic Packaging Tax liability”.
The tax authority confirmed that polylactic acid (PLA) and other compostable or biodegradable polymers can fall within the definition of plastic for PPT purposes. It also said certification under a compostability standard such as EN 13432 does not, by itself, create an exemption.
Instead, the normal PPT rules apply to the finished packaging component, including whether it contains at least 30% recycled plastic and whether any specific exemption or relief applies.
The PPT rate is £228.82 per tonne from 1 April 2026.
For packaging businesses considering alternatives to conventional plastics, the clarification highlights an important distinction: a material’s end-of-life characteristics and its treatment under the tax are separate issues.
Compostable still counts as plastic
For PPT purposes, HMRC defines plastic as a polymer material to which additives or other substances may have been added. Its guidance specifically includes polymers that are biodegradable, compostable or oxo-degradable.
This means PLA and other compostable polymers can fall within the definition of plastic for PPT.
There is no general exemption simply because plastic packaging is biodegradable or compostable, HMRC told Packaging Gateway.
Certification under EN 13432, the European standard covering packaging recoverable through composting and biodegradation, also does not in itself alter the tax position.
The relevant PPT tests must instead be applied to the finished packaging component.
For packaging buyers, this means switching from conventional plastic to compostable plastic cannot be assumed to produce a PPT saving simply because the alternative material is compostable.
Recycled content remains the key test
Compostable plastic packaging is not, however, automatically chargeable to PPT.
Like conventional plastic packaging, a component containing at least 30% qualifying recycled plastic is not chargeable to the tax. HMRC confirmed that the same recycled-content test applies whether the plastic is conventional, compostable or biodegradable.
Packaging containing at least 30% recycled plastic can still count towards the 10-tonne PPT registration threshold, however, and businesses must retain appropriate records and evidence to support recycled-content claims.
The distinction is important because compostability and recycled content are not interchangeable for PPT purposes.
HMRC guidance requires businesses to have evidence that recycled plastic has been used in the packaging component.
HMRC told Packaging Gateway that material which has been organically recycled or composted would not normally count as recycled plastic towards the 30% threshold.
“Composting is a biological treatment process rather than the use of recycled plastic in the manufacture of the packaging component,” HMRC said.
For packaging businesses, evidence that a material is compostable therefore does not establish that it contains qualifying recycled plastic. Compostability and recycled-content claims need to be assessed separately.
What packaging buyers need to check
PPT was introduced in April 2022 to encourage greater use of recycled plastic in packaging. It applies to finished plastic packaging components manufactured in or imported into the UK that contain less than 30% recycled plastic, unless they are outside the scope of the tax or qualify for a specific exemption or relief.
Packaging components made from more than one material can also fall within PPT where plastic is the heaviest material by weight.
The tax is relevant to overseas packaging suppliers and UK importers because imported finished plastic packaging can fall within its scope alongside packaging manufactured in the UK.
Businesses must register for PPT if they have manufactured or imported 10 tonnes or more of finished plastic packaging components in the previous 12 months, or expect to reach 10 tonnes in the next 30 days.
Packaging containing at least 30% recycled plastic can still contribute towards that registration threshold even though the component itself is not chargeable.
HMRC said businesses should consider the legislation and its published guidance when determining their PPT position and retain evidence supporting claims about recycled content.
For companies evaluating compostable alternatives, the key questions are therefore not simply whether a material is biodegradable or compostable. They also need to consider whether the finished component falls within the definition of plastic packaging, how much qualifying recycled plastic it contains, whether the registration threshold has been reached and whether a specific exemption or relief applies.
PPT rules change from April 2027
The PPT recycled-content rules will change from 1 April 2027.
A mass-balance approach will be introduced for qualifying chemically recycled plastic, allowing recycled content to be attributed to plastic packaging under the new rules.
At the same time, pre-consumer plastic waste will no longer count towards the 30% recycled-content threshold. The changes could affect how packaging manufacturers and importers calculate and substantiate recycled content, but do not alter the treatment of compostable plastics under the existing PPT framework.
For now, HMRC’s message to the packaging industry is clear: compostable does not mean tax-free.
For packaging buyers, compostability, recycled content and PPT liability therefore need to be assessed separately when comparing packaging materials.
