UK plastic packaging tax data increases scrutiny on supply chains

Newly published figures by the UK government indicate that 5,142 businesses in the UK were registered for PPT as of August 2026, up from the 4,927 registered in 2025.

This hike in registrations was despite total revenues generated by PPT decreasing 4% last year. The government recouped £250 million in PPT for the 2025-26 financial year, down from the £261 million reached in 2024-25, and continuing the downward trend seen in previous years.

The tax was introduced in April 2022 to compel businesses to pay tax when their plastic packaging contains less than 30% recycled plastic, with the aim of incentivising businesses to use more recycled content in plastic packaging.

Overall, imported plastic levels remained largely static. The amount of plastic packaging manufactured in the UK reduced by around 10% from 1,750 to 1,580 last year, suggesting that the tax may be having the desired effect from an environmental perspective and that businesses may be switching away from plastic packaging altogether.

Businesses are required to register for the tax and submit quarterly returns if they have manufactured or imported 10 tonnes or more of plastic packaging in the previous 12 months, of if they expect to in the next 30 days. However, businesses must register with HM Revenue and Customs (HMRC) even if all their packaging contains 30% or more recycled plastic, which may partly account for the overall rise in businesses registered for PPT last year.

Abigail McGregor, tax expert at Pinsent Masons, said the latest figures suggest that PPT is increasing business use of recycled plastic across the UK. “Taken together, the trends in tax take and reported volumes indicate that businesses have responded to the incentives created by the tax, whether by reducing plastic use overall or increasing recycled content to move packaging outside the charge,” she said.

Sukhbir Binning, a tax law expert at Pinsent Masons, said the data was encouraging, but also pointed to some potential compliance gaps as the system continues to bed in.

“The disparity between the number of businesses registered for PPT and those submitting returns raises interesting questions about how the regime is operating in practice,” she said. “It may reflect businesses registering out of caution while determining whether they fall within the scope of the tax. Equally, it could point to a degree of historic non-compliance, with businesses coming onto HMRC's radar and regularising their position. Either way, the figures suggest HMRC will continue to have a significant compliance focus in this area as the regime becomes more established.”

Since the tax was introduced, taxable plastic packaging has consistently made up a minority share of total plastic packaging. For 2025-26, this made up 37%, compared to 41% in 2022-23.

Businesses are also required to report to HMRC plastic packaging that is relieved or exempt from the tax, such as packaging that is exported, converted or used for the immediate packaging of human medicinal products. The amount of plastic packaging exported and converted last year remained under half its highest level registered in 2022-23.

The figures also come amid increased scrutiny on the UK’s plastic supply chain processes ahead of the introduction of a mass balance recycling scheme to enable chemically recycled plastic to qualify more easily for exemption from PPT, which is scheduled to come into force on 1 April 2027.

This is expected to be accompanied by a change in what the government classifies as recycled plastic for the purposes of PPT. Currently, so-called ‘pre-consumer’ plastics – typically waste or scrap materials that are released as by-products during the manufacturing process and are recycled before they ever reach consumers – are in scope of the PPT.

However, also with effect from 1 April 2027, ‘pre-consumer’ waste will be removed as a potential source of recycled plastic to provide greater economic incentives for businesses to improve their recycling processes. The government has indicated that this is unlikely to alter total plastic tax revenues, but rather shift the tax from one kind of exemption to another.

McGregor said the data highlights HMRC’s continued compliance focus amid ongoing concerns over the integrity of claims regarding recycled content. Against that backdrop, the government's consideration of mandatory certification of recycled plastic content is significant, she said. “Supporters will see certification as a way of strengthening confidence in the regime and reducing opportunities for fraud within complex supply chains,” added McGregor. “However, this would inevitably increase compliance obligations for businesses that already face substantial reporting and record-keeping requirements under the tax.”

The government recently conducted a consultation to examine the prevalence of erroneous claims of recycled content and the potential impact of a proposed mandatory certification scheme or third-party verification system for mechanically recycled plastic on businesses.

The consultation closed for public comment on 10 August, and the government is expected to publish its response in due course, possibly at the Autumn Budget on 28 October.

The rate of PPT increased last year to £228.82 per tonne. As with previous years, this figure was uprated in line with consumer price index (CPI) inflation. The government is likely to confirm if it will continue this approach in the upcoming Budget.