The UK Government has proposed a reform of the Plastic Packaging Tax, which was introduced in April 2022.

The tax applies at a rate of £200 per tonne to plastic packaging with less than 30% recycled content, covering imported packaging and that manufactured in the UK.

The Department for Business and Trade and the Treasury have outlined changes to the UK’s tax system, including reforming the Plastic Packaging Tax to support chemical recycling innovations.

The proposed reform will use a ‘mass balance’ approach to calculate the percentage of chemically recycled content included in plastic packaging, which verifies a set portion of recycled content overall by a third-party certificate.

‘Mass balance’ approach to boost investment in chemical recycling

The UK Government hopes that the mass balance approach will encourage investment in chemical recycling to develop solutions for harder-to-recycle items such as black and flexible plastics.

Chemical recycling is a process that breaks down plastics into their chemical components, which can be used to produce new plastic products.

The Government believes that using the mass balance approach will help support the development of circular economy practices in the UK.

Plastic packaging tax exceeds expectations

HM Revenue and Customs (HMRC) recently confirmed that the Plastic Packaging Tax raised almost £208m in its first nine months of operation, putting it on course to generate around £277m within its first year of operation.

However, some environmental groups have claimed that the tax is not a clear economic incentive, as it is unlikely to affect consumer behaviour or drive substantial shifts in the market.

They have called for an increase in the tax rate, an increase in the threshold of recycled content required in a product to qualify as tax-free and independent auditing of companies’ returns to improve the effectiveness of the tax.