UK Plastic Packaging Tax to Undergo 2 Major Changes in 2027 Impacting Thousands of Businesses

The UK’s HMRC has announced a pivotal reform to the Plastic Packaging Tax (PPT) that will take effect from April 2027, introducing two significant shifts likely to reshape the plastic packaging landscape. The revision will now include chemically recycled content while excluding pre-consumer recycled materials from the 30% threshold required to avoid the tax.

At the heart of the update is the adoption of the Mass Balance Approach (MBA)—a chain-of-custody method that allows companies to account for recycled content even when mixed with virgin materials. This enables chemical recycling outputs to be formally counted toward the recycled content quota, offering more flexibility for producers utilizing advanced recycling technologies.

However, the exclusion of pre-consumer recycled content deals a blow to soft packaging manufacturers like plastic bag and film producers, who have traditionally relied on clean production scrap to meet the tax exemption threshold. If they fail to incorporate 30% qualifying recycled content, they’ll face a levy of £223.69 per tonne.

This change comes amid rising global pressure to tackle plastic pollution. With plastic packaging accounting for 44% of plastic use and 67% of waste in the UK, the government originally launched the tax in 2022 to increase recycled material usage and curb virgin plastic dependence.

While stricter for some, the new policy opens a path for companies to simplify compliance, reduce audit burdens, and scale up chemical recycling investments. The UK has signaled alignment with evolving EU positions on mass balance accounting and will exclude chemical recycling outputs used as fuel, ensuring the tax promotes genuine circularity.

With less than two years to adapt, packaging businesses must act quickly to pivot sourcing strategies and upgrade recycling inputs—or face mounting tax costs.