Plastic Packaging Tax: the rate, the tests and the arithmetic

Plastic Packaging Tax (PPT) is an HMRC tax on plastic packaging, created by Part 2 of the Finance Act 2021 and in force since 1 April 2022. Its purpose is written into the test that decides the charge: a component escapes the tax only if at least 30% of its plastic is recycled.

The tax is charged per component, not per pack. HMRC's guidance on which packaging is subject to the tax treats a drinks bottle, its cap and its label as three components, each with its own weight and recycled content. A multi-material component is plastic only if plastic outweighs every other substance: a 10-gram carton with 4 grams of plastic, 3 of aluminium and 3 of cardboard is a plastic component, and all 10 grams are weighed.

Biodegradable and compostable polymers count as plastic. Glass, metal, paper and wood packaging sits outside PPT, but not outside packaging EPR, which covers every material.

Two businesses can be liable. Under section 44 of the Finance Act 2021, the person who produces a chargeable component in the UK pays, and for an import the person on whose behalf it is imported pays. A business that buys packaging a UK manufacturer has already finished, and fills or uses it without a further substantial modification, is not liable.

For UK manufacture, what matters is who carries out the last substantial modification. The law defines a component as “finished” once it has undergone its last substantial modification, or, where it is modified during packing or filling, its last one before that (s.47(3)). HMRC's definitions of finished components list extrusion, forming, layering and laminating, moulding and printing as substantial modifications, and name four processes that never are: blowing a preform, cutting, labelling and sealing.

For imports, HMRC treats the consignee as the importer unless it can show it acts for whoever controls the import. On incoterms, agree in writing who accounts for the tax.

Section 45(1) of the Finance Act 2021 sets the rate per metric tonne, and section 104 of the Finance Act 2026replaced “£223.69” with “£228.82” for components produced or imported on or after 1 April 2026. The rate is tied to the date of production or import, not to the date of the return, so a return for January to March 2026 filed in April still uses £223.69.

The history comes from HMRC's Plastic Packaging Tax steps page, updated on 12 February 2026. Every older rate is superseded; £223.69 is the one still most often quoted. The rate has changed on every 1 April since 2023, so a 2027/28 budget should not assume £228.82 will hold.

Section 55(2)has two tests, and meeting either one makes a business liable to register. Both use “equal or exceed”, so exactly 10 tonnes is enough.

The count includes components at 30% recycled plastic or more, medicine packaging and components set aside for non-packaging use; it leaves out import transport packaging and international stores. The notification period is in section 56; HMRC's registration guidance adds that if both tests are met you register from the earlier date.

Worked example: crossing the threshold on the first of a month

A UK importer brings in goods in plastic pouches and tubs. On 1 September 2026 its finished plastic packaging for September 2025 to August 2026 totals 9.6 tonnes, so it is not liable. September 2025 was a quiet month at 0.5 tonnes; September 2026 is busy at 1.1 tonnes.

Exactly 10.0 tonnes would also have made it liable. And an order taken on 14 September 2026 for 10.5 tonnes to arrive within 30 days would have made it liable from 14 September under the forward test, with notification due by 13 October and tax on everything from that day. Either way, keep the workings: regulation 21 of the Plastic Packaging Tax (General) Regulations 2022 requires a written record of the evidence used for the test.

The test that applies today is section 47(1)(a) of the Finance Act 2021: a finished component is chargeable if its recycled plastic, measured by weight, is “less than 30% of the total amount of plastic in the component”. Two consequences follow. A component at exactly 30% is not chargeable. And the percentage is a share of the plastic, not of the whole component: HMRC's example with 2 grams of recycled plastic, 2 of virgin plastic and 6 of aluminium and cardboard is 2 ÷ 4 = 50% recycled, not 20%.

The charge, when it applies, falls on the whole component. In HMRC's second example a 10-gram component with 1 gram of recycled plastic in 5 grams of plastic is 20% recycled, and tax is due on all 10 grams.

HMRC's records and accounts guidance says the evidence must show how the percentage was worked out, prove recycled plastic was used, tie it to dates and to a product line, and confirm the source. A new specification needs new evidence. For imports it must come from the manufacturer or a robust supply chain audit.

Scrap and regrind put straight back into the process after minimal reprocessing, such as shredding, are not recycled plastic. Waste remelted and repelletised can be, and until 31 March 2027 that includes reprocessed pre-consumer waste.

The tax is chargeable tonnes multiplied by the rate, with part of a tonne charged proportionately (s.45(2)). The examples use £228.82, so they apply to components produced or imported from 1 April 2026.

One product line below 30%

A mixed portfolio in one quarter

A UK converter finishes four lines between 1 July and 30 September 2026, with evidence for each line.

All 40.5 tonnes go on the return and count towards the threshold; 16.5 are taxed: 16.5 × £228.82 = £3,775.53, due by Friday 30 October 2026.

Now suppose line A's supplier certificate turns out not to cover the specification actually run. Section 47(2) treats line A as below 30%, adding 18.0 × £228.82 = £4,118.76 and taking the quarter to £7,894.29, more than double. Line D is the other exposure: at exactly 30% it is untaxed, but a measured 29.9% would put all 6.0 tonnes in charge. Lines that sit on the line need the tightest evidence.

Two Finance Act 2026 amendments change what counts as recycled plastic. Section 105lets “attributed recycled plastic” count towards the 30% test: plastic to which recovered material is attributed by a mass balance process under a chemical recycling certification scheme meeting HMRC's conditions, and only where that is shown. Section 106 removes pre-consumer plastic from the definition of recycled plastic. Under section 107, section 105 is in force now only for making regulations; the rest of it, and section 106, start on 1 April 2027.

For many converters the risk runs the other way. HMRC updated its guidance on 28 August 2026 to say pre-consumer plastic “will not be accepted” from 1 April 2027. If half of line D's 30% above is pre-consumer recyclate, it drops to 15% and its 6.0 tonnes a quarter come into charge.

HMRC's guidance on packaging not subject to the tax separates exemptions from exclusions, and the difference matters for the threshold.

Two limits catch people out. The transport exemption does not cover unfilled packaging, normal packaging around sales units, or intermediate bulk containers. And a ready-meal tray is not integral to the meal, because the food could be heated in another dish. Tax paid on packaging later exported can be reclaimed as a credit.

Once registered, a business files four returns a year through HMRC's online service. According to HMRC's return guidance, the return and payment are due by the last working day of the month after each accounting period.

Weights go on the return in kilograms, rounded down. Correct errors within four years of the original due date. If a return is late HMRC may issue an estimate and charge penalties, and late payment carries interest.

Accounts and records must be kept for at least six years from the end of the accounting period, by product line. PPT need not be shown on invoices, and if a manufacturer raises its price to cover it, VAT is charged on the whole new price. The same line-level data serves more than the tax: it is the base for packaging metrics in ESG data management.

Packaging extended producer responsibility (pEPR) is a separate regime under SI 2024/1332, run by Defra, PackUK and the environmental regulators. It covers every packaging material, not just plastic, and it charges disposal fees and recycling obligations rather than a tax. Our packaging EPR guide covers it in full.

The two can land on the same tonne, on the same business or on two businesses in the chain. Take one tonne of plastic flow-wrap at 25% recycled content. PPT is £228.82. For pEPR, the only final plastic base fee is the 2025/26 figure of £423 a tonne; confirmed 2026/27 fees have not been set, and PackUK's 2026 to 2027 operational plan says it intends to issue the initial notices of liability for 2026/27 by the end of November 2026. At the 2025/26 fee, the same tonne carries £228.82 + £423 = £651.82 across the two regimes. That is an illustration, not a forecast, and neither amount reduces the other.

The two regimes also reward recycled content differently. PPT asks one question, whether the plastic is at least 30% recycled; pEPR fees from 2026/27 are modulated on recyclability. For how both sit among the UK's wider duties, see our overview of UK ESG reporting requirements, and for the disclosure side, our guide to UK sustainability reporting.

Most PPT errors come from an out-of-date rate, a misread of the 30% test, or an assumption that someone else in the chain is paying. Test yourself on the seven below, then read the mistakes that follow.

Four mistakes that cost money

The same Act lands differently on a film converter, an importer of finished goods and a brand that buys its packaging in the UK. Pick the description that fits; each tab says what applies, what to do next and by when.

A dated compliance checklist

The timeline marks what has passed and what comes next as of the day you read it. For every regime's dates together, see the UK sustainability regulation timeline. Plastic Packaging Tax is one of two UK taxes charged on imports in the environmental family; the other, the UK CBAM, starts on 1 January 2027.

Plastic packaging componentFA 2021 Part 2

A product designed for use in the supply chain or as single-use consumer packaging that contains, protects, handles, presents or delivers goods, and in which plastic is the heaviest substance by weight.

Finisheds.47(3)

A component that has undergone its last substantial modification, or, if it is modified when packed or filled, its last one before that.

Substantial modificationHMRC

A manufacturing process that changes shape, structure, thickness or weight. Blowing a preform, cutting, labelling and sealing are not.

Chargeable components.47(1)

A finished component whose recycled plastic is less than 30% of the plastic in it by weight.

Recycled plasticHMRC

Plastic reprocessed from pre-consumer or post-consumer waste by a chemical or mechanical process; pre-consumer plastic stops counting from 1 April 2027.

Attributed recycled plasticFA 2026 s.105

Plastic to which recovered material is attributed under a chemical recycling certification scheme. Counts towards 30% only from 1 April 2027.

Accounting periodReturns

The three-month periods ending 30 June, 30 September, 31 December and 31 March.

Product lineRecords

A group of plastic packaging components produced to the same specification; accounts and records are kept line by line.