The UK government confirmed it would be offering businesses the opportunity to use a mass balance approach (MBA) to measuring recycled plastic from April 2027, after consultations with the industry on revamping the way recycled content was measured.
PPT is not charged on plastic packaging components containing more than 30% recycled plastic. Chemically recycled plastic has always been eligible for this exemption, however it can be hard to determine the exact amount of chemically recycled material in a specific output.
Mass balance is a model used by industries to track materials through their chain of custody through the value process and allows recycled or sustainable inputs mixed with new materials during the process to be allocated to particular outputs.
Since the tax was introduced in 2022, advancements in chemical recycling processes make it easier to recycle previously harder to deal with plastics. This new approach will enable businesses to take better advantage of these recycled plastics.
Abigail McGregor, a tax expert with Pinsent Masons, said the move to making a mass balance approach available had been anticipated since a 2023 consultation exercise and the government’s response to it at Budget 2024.
“The introduction of mass balance approach to achieve the 30% recycled threshold to claim exemption from PPT will be welcome to many businesses,” she said.
“The requirement for recognised commercial certification is not surprising in the context of HMRC grappling with challenges over the evidential requirements for recycled plastic coming from overseas.”
UK manufacturers and importers of plastic packaging will need to prove the supply chain for recycled material in their plastics is covered by an appropriate, PPT MBA standard-compliant certificate in order to qualify for the plastic tax relief. The government has committed to publishing a consultation in early 2026 on the introduction of this mandatory certification.
Alongside the shift to enable MBA, the government will no longer allow the inclusion of pre-consumer waste as a source of recycled plastic in the 30%-plus recycled content needed for PTT exemption.
Pre-consumer waste – which includes defective products and leftover scraps – can still be included in the recycling process but, the government said, the move to exclude it from tax relief in the switch to mass balance would provide an economic incentive to better recycling processes.
“Some businesses will feel the impact of no longer being able to classify pre-consumer plastic – such as plastic that has come off their own manufacturing line, repelletised then recycled into the manufacturing line again – as recycled,” warned McGregor.
“While the overall tax take is not expected to change as a result of the introduction of MBA, it may be that the burden of the liability shifts from one group of taxpayers – those currently unable to claim exemption due to the absence of the mass balance approach – to those who will no longer be able to use pre-consumer plastic to claim exemption.”
The government also announced that the rate of PPT from 1 April 2026 will increase in line with CPI inflation as part of the 2025 UK Budget.