Plastic packaging tax (PPT) is not charged on plastic packaging components that contain at least 30% recycled plastic. In theory, chemically recycled material can contribute to meeting this 30% requirement. In practice, the way that chemical recycling is carried out means that it is not always possible to determine the actual amount of recycled material in a specific output. As a result, some plastic packaging that contains at least 30% recycled plastic will be incorrectly subject to PPT. 

HMRC has launched a consultation to consider the application of a ‘mass balance approach’ as a possible solution to this problem. A mass balance approach would allow recycled plastic that is mixed with virgin plastic to be allocated to a particular output. This would enable more recycled plastic to qualify for relief from PPT. 

The government is seeking views on whether a mass balance approach should be approved as a method of allocating recycled content for the purpose of PPT. The consultation also considers what controls would be required. This includes the possible introduction of a certification scheme to ensure businesses using chemical recycling comply with any requirements. 

ICAEW’s Tax Faculty intends to respond to the consultation and is seeking views from its members with knowledge in this area. Comments on any of the questions in the consultation should be emailed to Ed Saltmarsh by 19 September 2023.