Plastic Tax to be reviewed to support chemical recycling

The UK Government is considering changes to the Plastic Packaging Tax to increase the scope for using recovered polymers from chemical recycling.

As part of the Tax Administration and Maintenance Day announcements, the Treasury has said that it will consult on a potential modification to the Plastic Packaging Tax.

The consultation aims to gather feedback on the use of a ‘mass balance approach’ to calculate the proportion of chemically recycled content included in plastic packaging.

Commenting on the consultation Gareth Davies, Exchequer Secretary to the Treasury, said: “The world leading Plastic Packaging Tax is helping tackle the scourge of plastic waste by encouraging businesses to include more recycled plastic in packaging. We want to improve the tax even further and this consultation is designed to help us do that by encouraging investment in the developing advanced recycling sector.”

The UK Plastic Packaging Tax was introduced by the UK government last year, aimed at encouraging the use of recycled plastic in the production of plastic packaging. It applies to businesses that manufacture or import plastic packaging that contains less than 30 per cent recycled plastic. The tax is charged at a rate of £200 per tonne of plastic packaging that does not meet the minimum recycled content threshold, and is applicable to packaging components produced in, or imported into, the UK.

Mass balance approach

The Department for Business and Trade is proposing the use of a ‘mass balance approach’ to calculate the percentage of chemically recycled content included in plastic packaging.

This approach means that a set portion of recycled content overall is verified by a third-party certificate. The flow of recycled feedstock can be traced across a supply chain using ‘chain of custody’ models that are designed to create transparency regarding the properties of goods and materials. The mass balance approach is one such chain of custody model, with certification schemes – such as ISCC Plus, REDCert and RSB Advanced Products – existing to verify the process and the percentage of chemically recycled content.

The government believes that taking the mass balance approach when determining the recycled content in plastic packaging would help to channel investment into chemical recycling, which will be required to develop solutions for harder-to-recycle plastics such as flexible or black plastics.

Chemical recycling

Chemical recycling breaks down plastic waste to a molecular level, producing feedstock that can be used to produce new plastic. It offers a complementary route for plastic waste that can’t be mechanically recycled, reducing the amount of plastic going to incineration or landfill while producing a higher quality of recycled plastic.

Plastic Packaging Tax

The PPT has already raised almost £208m within its first nine months of operation, putting it on course to generate around £277m within its first year. HMRC initially estimated that the tax would generate £235 million per year.

Steve Gough, Chief Executive Officer at Valpak, a leading provider of environmental compliance and part of Reconomy Group, commented: “The government’s new Plastic Packaging Tax was designed to stimulate a shift from the production and use of virgin plastics to an increasingly high proportion of recycled plastic.

“That the level of tax paid has surpassed government estimates should act as a warning that we have a long way to go on improving the circularity of plastic packaging. There is a clear economic incentive to increase recycled plastic packaging production in this country with growing demand for these more sustainable materials, particularly given the majority of this demand is currently being serviced from abroad."