Tax on Plastic Packaging: 5 Ways to Avoid or Reduce Impact

Matt Dobson: Last Updated 8th January 2025

Posted In: Environment | Guides and Advice

Mitigating Potential Price Increases

Ensuring the plastic packaging tax does not impact your costs (directly or indirectly)

If you are reading this article, then the likelihood is that you already know what the plastic packaging tax is.

In a nutshell, the tax, managed by HMRC, will be applied to all plastic packaging products with less than 30% recycled content at £200 per tonne. This includes bioplastics and other compostable / biodegradable plastics, and will be paid by importers or manufacturers of the packaging.

But even if you do not qualify for paying the tax directly, you may well see prices rise as suppliers pass on some or all of the costs.

As such, this guide highlights 5 ways to avoid or reduce the impact of the tax on plastic packaging.

It includes:

Options for changing material
Consideration for reusable packaging
Strategies for reducing overall packaging use
Plus a number of other ideas that may be worth exploring

Please continue reading for further details, or use the contents links to head straight to a specific section.

Quick Reference / Contents

01: Use Packaging with Recycled Content
02: Switch to Corrugated / Paper Based
03: Consider Reusable

04: Reduce Overall Packaging Use
05: Think Outside the Box

Introduction

How the packaging tax may affect your business

The UK Government has made it clear that only importers and manufacturers of plastic packaging will be liable for the plastic packaging tax, and not end users. So you could be forgiven for thinking that this will not affect your business.

This is likely to be incorrect, however.

Those that will have to pay the tax may decide to pass on at least some, and potentially all, of the additional costs they incur. There was even a section in the original legislation (since removed) which indicated all invoices for affected products would have to show the Plastic Packaging Tax surcharge.

how to avoid the plastic packaging tax — The plastic packaging tax could have a significant impact on the price of packaging you use - even if you won't directly pay the tax

So this is one way that the cost of your plastic packaging could increase. Another is that demand for recycled material could increase significantly, driving up the price of these products. This scenario would also potentially see the government increase the tax on non-recycled / virgin plastics still further, to make them less attractive in terms of their pricing.

So, even if you are not likely to pay the tax directly – and the majority of UK businesses would not – any plastic packaging products you use which do contain at least 30% recycled material are leaving you exposed to potential price increases.

Options businesses have to mitigate these costs

So, with inflationary pressures already causing headaches for businesses, what can you do to combat the (likely) rising cost of your plastic packaging?

Well, there are a range of different strategies and options available to you. These include:

Change the products your business uses (to include recycled content)
Switch to corrugated / paper-based packaging
Switch to reusable packs
Reduce your overall packaging use
Think outside the box

The remainder of this guide covers each of these strategies in further detail, allowing you to ascertain whether they would be suitable for helping your business combat any negative effects of the new tax.

01: Use Packaging with Recycled Content

Switch to plastic packaging that has at least 30% recycled content

Perhaps the most obvious solution to avoid cost increases caused by the plastic packaging tax, is to switch to equivalent products that use at least 30% recycled material.

A good example of this would be if you use Stratocell or similar foam end caps that qualify under that legislation (this would potentially include them being single trip, used only within the UK, and being the largest component of packaging by weight – you can see all qualifying criteria here).

It would be a relatively straight forward switch to begin using Stratocell R or Ethafoam HRC, both of which are polyethylene foams with a high recycled content (minimum 65%). This would not only help you avoid additional charges related to the new tax, but help your business to minimise the environmental impact of your packaging too.

This principal could apply to nearly all of your plastic packaging.

recycled plastic packaging — For almost all plastic packaging there will be a recycled alternative, including a range of foam materials

There are a couple of notes of caution here, however. Firstly, due to the manufacturing processes and general costs of recycled plastic material (when compared with virgin plastics), the costs of these recycled options are frequently higher than their standard equivalents. This means that there may be no cost savings, even after a plastic packaging tax surcharge.

Secondly, as demand for recycled packaging products grows, if supply cannot keep up then the price of these alternatives may also be driven higher.

As such, if you are purely focusing on costs (and taking out environmental considerations), then constant monitoring of the market would be required.

02: Switch to Corrugated / Paper Based Packaging

Can your packaging be replaced with paper-based alternatives?

An alternative to switching to recycled plastic packaging, is instead to switch to a different material altogether.

In fact, even before the plastic packaging tax was announced, many businesses (driven by consumer demand and the exposure of plastic pollution by documentaries such as Blue Planet) were already switching to paper based packaging.

Using the same Stratocell example as above, foam packaging could potentially be replaced with corrugated cardboard end caps instead. Other options here would include custom fittings, Corrispring, or even paper void fill packaging.

Another, separate point to consider here is that corrugated board can also have a degree of water resistance added, through liquiguard coating. This makes its performance much closer to plastic.

Any and all of these options would not be subject to the new tax.

switch to paper based packaging — An alternative to using recycled plastic is to use another material entirely, with many businesses already switching to paper based packs

There are a few points to bear in mind here too, however.

For starters, it is often not as simple as replacing one material with another. Whilst corrugated cardboard can be engineered to provide very high levels of transit protection, it takes an experienced and knowledgeable designer to do so.

Besides this, some products are simply so fragile or valuable that they require the absolute highest levels of protection (which is what foam, or some other plastic materials, can provide). In these cases, the costs of any damage caused during transit would far outweigh any additional costs incurred by the new packaging tax.

And similarly to switching to recycled plastic, any increased demand for corrugated or paper-based packaging may contribute to inflated prices too.

Regardless of this, moving to paper-based packaging is not only one of the best ways to mitigate any cost increases, but to also significantly improve the sustainability of your packaging too.

03: Switch to Reusable

Returnable transit packaging to replace single trip

Returnable transit packaging (such as Correx totes and Euro containers) will be subject to the new tax, as they will be part of the supply chain. Which makes it seem like an odd inclusion in a guide about avoiding the plastic packaging tax.

However, if your business uses a lot of single trip packaging within your supply chains, then switching to reusable packaging could be a way to reduce the ongoing impact of this.

This is because, due to their ongoing reuse, any additional costs imposed by the tax will be spread over a long time period (with the longevity of these products ensuring low “lifetime” costs, which the tax would do little to impact).

Whilst a move to returnable packaging will often see companies replacing corrugated boxes with durable plastic alternatives (which may seem to go against the goals of the packaging tax), what is often overlooked is the range of sundries and other consumables that are also used within the supply chain.

For example, plastic bags (including those which are ESD safe to protect electronics) could be replaced with specialist divisions placed within the outer containers.

Even plastic films used to protect delicate surfaces could potentially be replaced with dividers manufactured with material such as bubble board, which can be used over many hundreds of uses (and has special surface laminates to provide the required protection).

Admittedly this will only be an option for certain types of businesses (typically those in B2B spaces, rather than direct to consumer where there is no easy return transport available), but should be a consideration where available.

04: Reduce Overall Packaging Use

Minimising – rather than eliminating – the use of plastics

The majority of the options detailed in this guide so far have focused on completely eliminating plastic packaging that falls under the scope of the tax – either by using recycled alternatives, completely different materials, or products which are (or may be) exempt.

Another option, however, is to look at simply reducing the amount of plastic packaging your business uses.

For example, plastic void fill (such as foam or other dunnage) is often added to over-sized boxes to ensure the contents are safe during transit. So, if the outer corrugated boxes were optimised to be more space efficient, less plastic “infill” would be used (reducing your exposure and overall costs).

packaging optimisation — Optimising your packaging and using custom sizes can help reduced plastic void fill requirements (and therefore your exposure to the tax)

In fact, optimising your packaging in this way can have a number of other cost benefits. Less material used overall. Less storage space required. Typically quicker packaging times (and increased productivity). And much improved transit efficiency, too. This last point in particular will not only reduce your costs but, over time, significantly reduce your carbon footprint as well.

It is here that we would normally raise a number of counter points or considerations regarding the strategy detailed, but in this case, there really isn’t any. As long as you choose to work with an experienced, knowledgeable packaging designer / supplier, there are only benefits to analysing and optimizing your packaging.

05: Thinking Outside the Box

Other ways that you may be able to reduce plastic packaging use

Finally, there may be a number of other tactics or ideas that you can use to help reduce your plastic packaging use.

For example, you may be able to incentivise customers to collect products in store, rather than have them delivered (this could be through delivery charges, or vouchers etc. which are given when collecting items). This could help reduce the secondary packaging such as plastic void fill, poly mailers etc. used for deliveries.

The use of collection lockers may also allow you to reduce the amount of packaging required (as this would mean goods not being subjected to as many touch points in the delivery network).

Schemes to encourage consumers to return plastic packaging to you for reuse may also be worth exploring, depending on how the final legislation treats reusable items.

Whilst these final ideas may be the most difficult to implement, it is certainly worth exploring all avenues.

in store collection — There may be some more "left-field" strategies you could consider to reduce your use of plastic packaging

Summary

Avoiding or mitigating the costs of the Plastic Packaging tax

Regardless of whether you will be directly paying the Plastic Packaging tax or not, its introduction April 2022 has the potential to impact your costs regardless.

As such, it makes sense to start auditing your packaging inventory now, and to take appropriate steps to limit your exposure to potential price increases.

GWP, as experienced packaging manufacturers, are able to help with a number of these strategies. This includes switching to different materials, packaging optimisation and reduction, and much more besides.

So if you would like to see the ways GWP can help you to avoid or reduce the impact of the tax on plastic packaging, please don’t hesitate to get in touch.

Important Notice

The information on this page is believed to be correct at the time of publication. The content of this article is also subject to change until the Plastic Packaging Tax legislation is fully approved by Parliament.

Please also note that the information provided is intended as a guide only. GWP can accept no responsibility or liability for loss, damage, or any other consequence of reliance on this information, howsoever caused. As all applications and scenarios vary, it is your responsibility or the responsibility of your business to ensure that tax is paid if / where applicable. If in any doubt, please check with your tax advisor.