UK Plastic Packaging Tax revenue continues to decline

Revenue generated by the UK’s Plastic Packaging Tax has fallen to around £250 million as a smaller proportion of plastic packaging placed on the market remains liable for the levy. New figures indicate that approximately one-third of declared plastic packaging is now taxable, reflecting continued changes in material sourcing and recycled content across the packaging sector.

The Plastic Packaging Tax was introduced in April 2022 to encourage manufacturers and importers to increase their use of recycled plastic. It applies to plastic packaging manufactured in or imported into the UK when the material contains less than 30% recycled plastic. Companies producing or importing at least 10 tonnes of plastic packaging within a 12-month period are required to register.

Smaller proportion of packaging remains taxable

The latest figures suggest that the share of packaging subject to the tax has continued to fall. In the 2024-2025 financial year, 38% of declared plastic packaging was taxable, compared with 42% during the previous year. The latest data now puts the proportion at roughly one-third.

This downward trend may indicate that more manufacturers and packaging users are incorporating sufficient recycled material to exceed the 30% threshold. Packaging that meets or exceeds this level does not incur the tax, creating a direct financial incentive for companies to increase recycled content in their products.

Tax receipts fall despite higher tax rates

The reduction in revenue is particularly notable because the tax rate itself has increased since the scheme was introduced. The original rate was £200 per tonne in 2022-2023, rising to £210.82 in 2023-2024 and £217.85 in 2024-2025. From April 2025, the rate increased again to £223.69 per tonne.

Despite these increases, tax receipts have been moving downwards. HM Revenue & Customs reported revenue of £268 million in 2023-2024, followed by £259 million in 2024-2025. The latest figure of approximately £250 million therefore continues the decline, suggesting that reductions in taxable packaging are outweighing increases in the rate charged per tonne.

Recycled content becomes a commercial consideration

The figures underline the growing influence of recycled content requirements on packaging design and procurement decisions. For manufacturers using large volumes of plastic packaging, reaching the 30% recycled content threshold can reduce tax exposure while also supporting corporate sustainability objectives.

The policy was designed not simply to generate government revenue but to stimulate demand for recycled plastics and encourage greater investment in collection and recycling infrastructure. A declining taxable share may therefore be interpreted as evidence that packaging producers are adapting their material strategies in response to the incentive.

Further changes ahead for the UK plastics market

The regulatory framework surrounding recycled plastics is continuing to evolve. The UK government has already confirmed further adjustments to Plastic Packaging Tax rules, including measures relating to chemically recycled material and the use of mass balance accounting.

For packaging producers and importers, accurate information on material composition and recycled content is therefore becoming increasingly important. As fewer tonnes of packaging remain taxable, the latest figures provide another indication that recycled plastic is becoming a more significant part of the UK packaging market.