United Kingdom Plastic Packaging Tax generates revenue amid carbon savings debate

The United Kingdom’s Plastic Packaging Tax (PPT), introduced in April 2022, has become a significant source of revenue for HM Revenue and Customs (HMRC). The tax, which targets packaging containing less than 30 per cent recycled material, generated £261 million in the previous fiscal year and is projected to bring in £250 million for 2025–26. The rate has increased from £200 per tonne at its inception to £228 per tonne.

While the tax has encouraged the use of recycled content—with businesses declaring approximately 5.8 million tonnes of qualifying packaging—critics argue it may be hindering other environmental goals. Packaging firm Duo suggests the tax acts as an ‘own goal’ regarding carbon savings because it treats bio-based plastics the same as virgin plastics.

Duo reports that while recycled plastic has reduced carbon footprints by an estimated 3.26 million tonnes of CO2e, the shift toward recycled content to avoid the tax has caused a decline in the use of bio-based alternatives. The company claims that using bio-based plastics could have resulted in a net carbon-negative impact of 12.3 million tonnes of CO2e.

Looking ahead, the UK will implement a ‘mass balance’ system starting in April 2027. This accounting method will allow chemically recycled plastic to qualify for the tax relief by using certified accounting to allocate recycled shares within industrial systems containing both recycled and virgin feedstocks.