Understanding the Plastic Packaging Tax

The Plastic Packaging Tax (PPT) is a key part of the UK Government’s strategy to reduce plastic waste and accelerate the transition towards a more sustainable, circular economy. Introduced to encourage greater use of recycled materials, the tax directly affects how businesses design, source, manufacture, and manage plastic packaging.

For organisations involved in manufacturing, importing, packing, distribution, logistics, and e‑commerce, PPT is not simply an environmental initiative. It is a compliance obligation with clear financial consequences. Businesses that place plastic packaging on the UK market must understand whether they are liable, how the tax is calculated, and what evidence is required to demonstrate compliance.

With supply chains often stretching across borders and involving multiple parties, Plastic Packaging Tax obligations can quickly become complex. However, with clear processes, accurate data, and the right operational systems, businesses can manage risk, control costs, and align their packaging operations with long‑term sustainability objectives.

What Is the Plastic Packaging Tax?

Overview of PPT

The Plastic Packaging Tax came into force on 1 April 2022 and is administered by HM Revenue & Customs (HMRC). It applies to plastic packaging manufactured in the UK or imported into the UK that contains less than 30% recycled plastic by weight.

The tax applies to finished plastic packaging components, whether they are supplied empty or already filled with goods. Where packaging does not meet the recycled content threshold, the business responsible for placing that packaging on the UK market must register for PPT, submit plastic packaging reporting on a quarterly basis, and pay the tax due.

PPT sits alongside other environmental measures, such as extended producer responsibility and recycling obligations, but operates as a standalone tax regime. For many businesses, this has introduced new requirements around tax registration in the UK, data collection, and supply chain transparency.

What It’s Designed to Achieve

The primary aim of the Plastic Packaging Tax is to increase demand for recycled plastic and reduce the use of virgin plastic materials. By applying a cost to packaging that falls below the recycled content threshold, the tax creates a strong financial incentive to rethink packaging design and material sourcing.

In the longer term, PPT is intended to support investment in plastics recycling infrastructure, improve collection and recycling rates, and reduce reliance on single-use plastic products. The tax rate is reviewed annually and may increase in line with inflation, reinforcing the need for businesses to take a proactive, long‑term approach rather than treating PPT as a short‑term cost.

Who Must Comply

Registration Thresholds

A business must register for Plastic Packaging Tax if it manufactures or imports 10 tonnes or more of finished plastic packaging components within a rolling 12‑month period. This threshold applies regardless of whether the packaging is chargeable or exempt.

Both empty packaging and packaged products imported into the UK count towards this threshold. Businesses operating below the threshold are not required to register, but they must still monitor volumes carefully. Exceeding the threshold triggers immediate obligations to register, keep records, and submit quarterly PPT returns.

Which Businesses Are Liable

Plastic Packaging Tax obligations can apply at several points in the supply chain. Businesses commonly affected include:

• UK manufacturers of plastic packaging components
• Importers of plastic packaging, including packaging filled with goods
• Businesses responsible for the last substantial modification of packaging before it is placed on the UK market

In practice, liability is not always straightforward. Where tax is not paid at the correct point, it may pass along the supply chain, creating potential secondary liability. This makes it essential to have clear contractual terms, accurate invoicing, and a shared understanding of plastic tax obligations between suppliers, customers, and logistics partners.

What Packaging Is in Scope

Defining Plastic Packaging

For PPT purposes, packaging includes any material used to contain, protect, handle, deliver, or present goods. Packaging is classed as plastic packaging if plastic is the predominant material by weight.

This definition covers a wide range of items used across manufacturing and distribution, including film wraps, trays, tubs, containers, bottles, labels, caps, lids, and protective materials. Multi‑material packaging is also in scope where plastic accounts for the highest proportion of weight, even if other materials such as paper, foil, or card are present.

Understanding what packaging includes is critical, as items that may appear ancillary or secondary can still fall within scope and contribute to overall tonnage.

Exemptions & Out‑of‑Scope Items

Packaging that contains at least 30% recycled plastic by weight is exempt from the Plastic Packaging Tax charge. However, exempt packaging must still be recorded and included when assessing whether the registration threshold has been exceeded.

Certain transport packaging used in the import of goods may also be exempt, such as pallet wrap used solely for transport purposes. In all cases, exemptions rely on evidence. Businesses must be able to demonstrate recycled content, intended use, or eligibility for relief through robust documentation.

How the Tax Is Calculated & Paid

Tax Rate & Calculation

The Plastic Packaging Tax is charged per tonne of chargeable plastic packaging placed on the UK market. For recent tax years, the rate has been £217.85 per tonne, although rates are subject to change and should be reviewed annually.

Calculating liability requires accurate data on packaging weight and recycled content. For example, if a business places 25 tonnes of plastic packaging on the market and only 10 tonnes meet the 30 recycled plastic threshold, the remaining 15 tonnes would be chargeable at the prevailing tax rate.

Accurate calculations depend on reliable material specifications and verified recycled content data from suppliers.

Quarterly Returns & Payment

Once registered, businesses must submit a quarterly PPT return to HMRC. Accounting periods run from April to March and are divided into four quarters.

Each return must detail the total weight of plastic packaging manufactured or imported, how much is chargeable, and how much qualifies for exemptions or reliefs. Payment must be made by the relevant deadline for each quarter. Failure to submit accurate returns or make timely payments can result in penalties, interest charges, and increased scrutiny.

Compliance Essentials: Record Keeping & Due Diligence

Record Keeping Requirements

Robust record keeping is central to PPT compliance. Businesses must maintain records covering:

• The total weight of plastic packaging materials manufactured or imported
• Evidence of recycled content, including certificates, specifications, and audits
• Documentation supporting exemptions, such as transport packaging or exported goods
• Records of packaging exported from the UK or relieved from tax

Records must be retained for inspection by HMRC and should be easily accessible. Manual systems are often insufficient, particularly for businesses managing large volumes or multiple product lines.

Due Diligence in Procurement & Supply Chains

Plastic Packaging Tax compliance extends beyond a business’s own operations. It relies heavily on accurate information provided by suppliers, converters, and packaging manufacturers.

Contracts should clearly set out responsibilities for providing recycled content data and supporting documentation. Where possible, businesses should verify claims using recognised standards, such as ISO or BS certifications. Inaccurate or incomplete data can lead to under‑reported tax, disputes, and unplanned liabilities.

Strategies to Reduce Exposure

Increasing Recycled Content

The most effective way to reduce Plastic Packaging Tax exposure is to ensure packaging meets or exceeds the 30% recycled content threshold. This may involve working with suppliers to source recycled polymers, adjusting material specifications, or redesigning packaging formats.

Although recycled materials can sometimes present processing challenges, many businesses find that investment in recycled content delivers long‑term benefits, including improved sustainability credentials and reduced reliance on volatile virgin material markets.

Design & Process Optimisation

Reducing the overall amount of plastic used is another effective strategy. This can include lightweighting packaging, eliminating unnecessary components, or switching to alternative materials where appropriate.

Cross‑functional collaboration between engineering, procurement, and sustainability teams is often key. Modern conversion, trimming, and winding equipment can support more efficient material use, improved handling of recycled or chemically recycled plastics, and reduced waste during production.

How Swallow Machinery Can Help

Swallow Machinery supplies ancillary equipment for paper, film, and foil conversion, supporting manufacturers looking to optimise packaging processes and reduce plastic waste.

By improving material control, reducing off‑cut waste, and enabling efficient handling of recycled and alternative materials, the right machinery can play a practical role in Plastic Packaging Tax compliance. Better process efficiency not only lowers raw material consumption but also improves data accuracy, supporting reliable plastic packaging reporting and record keeping.

Conclusion

The Plastic Packaging Tax represents a significant shift in how plastic packaging is regulated and taxed in the UK. Businesses that manufacture or import plastic packaging must understand whether they are liable, how the tax is calculated, and what evidence is required to remain compliant.

With accurate records, strong supply chain due diligence, and proactive packaging design, organisations can reduce tax exposure while supporting wider sustainability goals. Reviewing packaging materials, processes, and machinery is an important step towards long‑term compliance and resilience.