Introduced in 2022, Plastic Packaging Tax (PPT) requires UK manufacturers and importers of plastic packaging products to pay tax on plastic packaging that falls within the scope of the tax. The latest HMRC statistics show that annual receipts of £259m for the year ended April 2025, a decrease of £9m compared to the previous year. While this is not great news for the Exchequer, it is more than was originally expected (£225m) and suggests that for all of the compliance problems created for taxpayers affected by the tax, it is effective.

In terms of taxpayers, there was a slight increase in the number of businesses registered for PPT, rising to 4,927 businesses as of 6 August 2025. However, this is a fraction of the number of businesses HMRC expected to register. We therefore expect that HMRC will continue to raise this issue and penalise those that are not complying with the tax.

Delving into the detail, there are potential positives that can be seen for the UK economy. The total amount of plastics manufactured in the UK has increased to its highest level since the introduction of the tax, suggesting that the domestic industry is growing.

There is good news for the environment as well, as the proportion of recycled plastics in the UK is growing faster than the overall volume of plastics in the country. Any packaging that is more than 30% recycled content is exempt from PPT which has led to the fall in receipts.

While the statistics suggest a slight positive shift towards sustainability, there remains questions on data accuracy and evidential standards. PPT is now part of the business risk review process reserved for the UK’s largest businesses and for the wider taxpayer community it remains an area of review. Because PPT is exceptionally burdensome to calculate and evidence, our experience is that many businesses overpay PPT to ensure that they do not fall foul of HMRC penalties.

Three years into its implementation, there are reasons to be cheerful about the effect of PPT. However, reporting continues to be a challenge, with registrants relying on prudent estimates as their data cannot be aligned with HMRC’s exacting standards and many businesses still ignorant of their obligations. This means we expect HMRC will step up enforcement through enquiries and penalties for non-compliance.

Businesses should ensure that they seek advice if they import either plastic or goods wrapped in plastic. As HMRC would have data in relation to imported goods via import declarations submitted by businesses, it is likely that these businesses will be the first to be targeted in HMRC’s PPT campaign.

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