UK manufacturers and importers that use chemically recycled plastic have a new compliance deadline to prepare for. From 1 April 2027, businesses that want to count chemically recycled content in their Plastic Packaging Tax return must use a certified mass balance approach.
HMRC published its first preparation guidance on 28 August. For affected SMEs, the practical message is to start mapping suppliers, certificates and record-keeping now. The rules reach beyond the business submitting the tax return and depend on evidence from the wider supply chain.
What is changing?
A mass balance approach tracks the proportion of chemically recycled plastic within a mixture of recycled and virgin material, then attributes that recycled share to packaging outputs. This is needed because the two sources cannot be physically distinguished after processing.
Using mass balance will be optional. However, HMRC says chemically recycled plastic will be treated as non-recycled, or virgin, plastic for Plastic Packaging Tax purposes if a business does not use the approach. That could affect whether packaging meets the 30% recycled-content threshold for exemption.
The change applies where a business manufactures packaging components in the UK using chemically recycled plastic, or imports finished packaging components made with it. It does not replace the existing method for mechanically recycled plastic.
Certification runs through the supply chain
The central challenge is evidence. Every relevant business in the chain, from the chemical recycler through to the plastic packaging converter, must be certified under a scheme that meets HMRC’s minimum requirements. Certification must cover the chain from the point at which plastic waste enters chemical recycling until the packaging component is complete.
UK manufacturers using chemically recycled material will need certification. Importers of finished packaging do not themselves need certification solely because they import it, but they must check that their supply chain is certified and retain evidence from the supplier.
Each transfer of attributed recycled material must be accompanied by a valid certificate and an attribution declaration. The declaration identifies the material, the businesses involved and the amount of recycled material being transferred. A new declaration is required for each batch.
What affected SMEs should do now
Businesses do not need to wait until next April to begin. A sensible preparation programme should include:
- identifying every product and packaging component that contains chemically recycled plastic;
- asking suppliers which certification scheme they use and when their certification will be valid;
- checking whether purchase, stock and production systems can retain batch-level attribution declarations;
- assigning responsibility for supplier due diligence and checking certification registers;
- reviewing contracts and procurement terms so suppliers must provide complete evidence; and
- planning to retain certificates, declarations and supporting records for six years.
Businesses operating within the material supply chain will also need a site-level mass balance system. HMRC’s guidance specifies a three-month accounting period with no negative balance, alongside appropriate conversion factors where attributed recycled plastic is calculated.
The administrative risk should not be underestimated. If a supplier is not properly certified, or an attribution declaration is incomplete, the recycled content cannot be counted through mass balance. HMRC may ask to see certificates, declarations and supply-chain evidence during a compliance check. It may also charge penalties where the minimum requirements have not been met but recycled plastic has still been accounted for on a return.
Questions to put to suppliers
SMEs should ask suppliers for more than a general assurance that material is recycled. Useful questions include whether the entire relevant chain is certified, whether certificates can be checked on an electronic register, who will issue each attribution declaration, and how corrections or missing documents will be handled.
Importers should pay particular attention to overseas chains. Although an importer of finished packaging may not need its own certification, it remains responsible for checking evidence before using mass balance in its UK tax return.
More detail is still to come
HMRC says it will publish more detailed guidance, including further information on penalties, in early 2027. Companies should monitor updates, but the core evidence requirements are clear enough to begin supplier conversations and system changes now.
The primary sources are HMRC’s preparation guidance for businesses and its overview of minimum certification requirements.
