United Kingdom Autumn Budget 2025: Major Changes to Plastic Packaging Tax Announced

The UK government has unveiled significant reforms to the Plastic Packaging Tax (PPT) in its Autumn Budget, aiming to strengthen recycling incentives and close loopholes in the system. The changes, which will come into effect over the next two years, include the introduction of a mass balance approach (MBA) for chemically recycled plastics and the removal of pre-consumer waste as a source of recyclate.

PPT and Its Evolution

Since April 2022, PPT has applied to plastic packaging containing less than 30% recycled plastic, with a current rate of £223.69 per tonne. The tax is designed to encourage the use of recycled materials and reduce reliance on virgin plastics.

Key Changes Announced

1. Rate Increase from April 2026 The PPT rate will rise in line with inflation, increasing from £223.69 to £228.82 per tonne from 1 April 2026. This applies to all plastic packaging manufactured in or imported into the UK that contains less than 30% recycled plastic.
2. Mass Balance Approach for Chemical Recycling (Effective April 2027) From 1 April 2027, businesses can use a mass balance approach to attribute chemically recycled plastic to packaging for PPT purposes. This method allows for mathematical allocation of recycled content in complex chemical processes where physical tracking is impossible.

Packaging meeting the 30% recycled threshold under MBA will qualify for tax relief, provided it is certified under approved schemes. Certification will require compliance with strict standards on input materials, allocation methods, and supply chain audits.

3. Removal of Pre-Consumer Waste Also from April 2027, pre-consumer waste such as production scrap and internal returns will no longer count toward the 30% recycled content threshold. This move targets a loophole that allowed easy-to-recycle internal residues to qualify for tax relief without increasing post-consumer recycling efforts.

Future Consultations and Compliance

The government will launch a technical consultation in 2026 to define MBA requirements and certification standards.
A separate consultation will explore mandatory certification for mechanically recycled plastics, following concerns about compliance and verification.

Impact on Industry

While the fiscal impact is expected to be minimal, the strategic implications are significant:

• Businesses seeking PPT relief must adapt supply chains, join certification schemes, and update internal processes.
• Companies relying heavily on pre-consumer waste will need to pivot toward post-consumer recyclates or invest in chemical recycling technologies.

The UK government anticipates these measures will drive investment in advanced recycling systems and reinforce the country’s commitment to a circular economy.