Updates to the Packaging Waste Regulations
What is the packaging extended producer responsibility (EPR)?
If your business uses, handles, imports or generates packaging, then you are likely to be affected by the new packaging extended producer responsibility (EPR) legislation. This beginner’s guide provides all the information you need to determine whether EPR impacts your business and the steps you may need to take.
But what is the new EPR scheme?
From 2023, the packaging extended producer responsibility (EPR) makes organisations significantly more responsible for the recovery and recycling costs of their packaging. Variable fees also aim to encourage the use of more easily recycled materials. Affected businesses may need to report packaging use, pay fees, and purchase Packaging Waste Recovery Notes (PRNs).
Why is the EPR being introduced?
The current packaging waste regulations
The existing packaging waste regulations, the Producer Responsibility Obligations, were introduced in 1997. These regulations aimed to increase recycling rates.
The 25 years in which the regulations have been in place have seen overall packaging recycling rates increase to approximately 70 per cent. Corrugated cardboard and paper-based packaging rates are even better, at around 84 per cent. The Packaging Waste Regulations have meant national recycling targets have been met or exceeded since the scheme’s introduction.
But consumers, businesses and the government have become increasingly aware of the environmental damage of packaging waste. The impact of plastic waste has come under particular scrutiny. The Plastic Packaging Tax has been the first step in addressing this specifically.
And whilst the Packaging Recovery Note (PRN) system that underpins the existing regulations has been a success, it only covers part of the cost of recovery and recycling of packaging. In fact, the funds generated only cover around 7% of the total costs of managing post-consumer packaging waste in the UK.
Most people agree that the UK needs to recycle more. Yet increased funding is required to do this.
Currently, the PRN model sees financial responsibility for packaging recycling shared across various organisations within the supply chain. This arrangement is known as shared producer responsibility.
This approach is changing under the new regulations. In line with many European countries, the new Extended Producer Responsibility system now means that individual businesses are financially obligated to meet the costs of managing their packaging waste. This obligation also extends to end-of-life management of other qualifying products, such as batteries and electronics goods covered under WEEE regulations.
The current system of businesses purchasing PRNs to meet their recycling obligations is to remain. However, UK brand owners or importers of non-UK-based brands will now also be responsible for 100% of the net costs related to collecting household packaging waste.
They will also become responsible for funding recycling awareness and advertising programmes, plus costs incurred by local councils associated with bins in public spaces.
The aims of Extended Producer Responsibility
Ultimately, the Extended Producer Responsibility legislation aims to create a more circular economy and increase recycling.
By making individual businesses responsible for the total net cost of managing packaging waste – rather than the taxpayer – producers will have a greater financial incentive to use recyclable materials. It should also encourage the use of more recycled content in packaging.
The eventual introduction of modulated fees also aims to encourage businesses to move away from difficult (or impossible) to recycle packaging. Modulated fees effectively involve charging increased sums for plastics and other harder-to-recycle materials.
When is EPR happening?
Reporting and data collection
The government, through Defra, is introducing the Extended Producer Responsibilities for Packaging in a phased approach. The plan is for full implementation by 2027.
However, all businesses that qualify under the new regulations should start collecting data from 1 January 2023. Depending on how you are affected, you may need to create an account and register your organisation from July 2023 (for certain businesses, this will take effect from January 2024).
Besides recording data and registering an account, labelling requirements change with the packaging EPR scheme.
All packaging, except flexible films, must include a binary “recycle” or “do not recycle” logo from 1 April 2026.
Defra, who are administering the EPR legislation, have licensed the Recycle Now symbols for this purpose. These logos are currently part of the OPRL (On Pack Recycling Label) programme, which requires a paid membership.
These labelling requirements will eventually apply to consumer and delivery packaging (e.g. eCommerce).
Definition of packaging affected
The definition of packaging, as provided by the uk.gov website, is as follows:
Packaging is any material that is used to cover or protect goods that are sold to consumers. It makes handling and delivering goods easier and safer. It includes anything that’s designed to be filled at the point of sale, such as a coffee cup.
Packaging also makes goods look appealing and it may display a company’s logo or brand. ‘Goods’ could include raw materials or processed items.
However, there is an essential distinction between what the new EPR legislation classes as household packaging and what is deemed industrial or transit packaging.
Household packaging is used by individuals and ends up in houses, offices and other consumer premises. This definition covers primary packaging such as those for consumer goods, food and drink, alongside postal packaging used for eCommerce.
EPR fees will not be applicable to secondary and tertiary packaging, mainly covering that used to transport goods in B2B applications.
However, changes to EPR reporting will affect all packaging. The existing requirement to purchase PRNs will also remain for transit packaging.
Qualifying packaging activities
Determining if your business is affected
Besides the type of packaging within the scope of the Extended Producer Responsibility, determining whether your business is financially liable (or needs to report packaging use) depends on several defined activities.
If your business undertakes any of the following, then you at least need to record the packaging you use:
- You supply goods into the UK market under your own brand.
- Place goods into unbranded packaging.
- You import products that are in packaging.
- You own an online marketplace.
- Your organisation hires or loans out reusable packaging.
- You supply empty packaging to other businesses.
Supplying goods to the UK market under your own brand
If your business sells products or goods in packaging labelled with your brand, you are likely to fall within the scope of the EPR.
Branding includes any logo, trademark, or distinctive mark.
You may also need to act if you pay another business to produce goods you sell under your brand name. Similarly, if a third party packs goods sold under your brand name, places branded goods on the market for you, or imports goods for you, you may need to take action.
A helpful example is a food product manufacturer. If you produce food products under your own name, and the packaging includes your brand, you are responsible for that packaging as part of EPR. You remain liable even if a third party, such as a supermarket, sells your products.
However, if you produce goods that a supermarket sells under its brand name, it would be responsible for any packaging.
Placing goods into packaging that is supplied unbranded
You may be eligible under the Extended Producer Responsibilities scheme if you place goods or products into unbranded packaging supplied to your business. EPR responsibility applies whether you are packaging the goods for your own business or a third party.
Importing products that are in packaging
If your business or organisation imports products from outside the UK, which use primary, secondary or any packaging used for their transportation, you are likely within the scope of the legislation.
Packaging EPR applies even if you discard the packaging before placing the goods on sale.
However, if you are importing goods for a third party, they are responsible for reporting any costs incurred through EPR. In this scenario, you do not need to take any action.
Owning an online marketplace
The government defines online marketplaces as websites allowing non-UK businesses to sell their goods online to UK consumers. You will be responsible for the packaging generated by these activities if you own such a marketplace.
However, if you run a website that only sells goods from UK businesses/organisations, this is not a marketplace (and therefore is outside the scope of the EPR).
Hiring or loaning out reusable packaging
Supplying empty packaging
If your business is a packaging manufacturer or distributor – that effectively supplies empty packaging – you will likely be required to take action under the EPR legislation.
In this scenario, EPR primarily affects the packaging you supply to what the legislation defines as small businesses (also known as De Minimis).
Conversely, your business may use packaging but have a turnover of less than £2 million or handle less than 50 tonnes of packaging per year. In this case, the new regulations make your packaging supplier liable.
Is your business affected?
Small vs large businesses
As mentioned in the previous section, the Extended Producer Responsibility’s responsibility depends on a business’s size and how much packaging it handles. The government defines this as small or large organisations.
Small business definition for EPR
Suppose your business turnover is between £1 and £2 million and is responsible for handling or supplying over 25 tonnes of packaging (either empty or with goods) into the UK market. In that case, EPR classifies you as a small business.
Equally, if your turnover is over £1 million per annum, and you are responsible for between 25 and 50 tonnes of packaging, you are also a small business.
If either of these scenarios applies to you, you will only need to report your packaging usage as part of the small producer obligations. This part of the legislation is also commonly referred to as De Minimis. Your packaging supplier will be responsible for purchasing PRNs and any other charges or fees.
If your business has a turnover of more than £2 million per year, and you handle or supply more than 50 tonnes of empty packaging or packaged goods within the UK, then you are deemed a “large business”.
If you qualify, you will be liable for purchasing PRNs and other fees/costs associated with packaging recovery and recycling as part of the EPR.
Please note that the weight of packaging supplied or handled applies to the calendar year (January to December) rather than the financial or tax years.
Parent companies, groups and subsidiaries
There are different options for registering and complying with the EPR regulations if you are part of a parent company, group of businesses, or a subsidiary.
Firstly, you could register as a whole group. In this scenario, the parent company would be responsible for complying with the EPR for packaging for all subsidiaries within the group.
Secondly, subsidiaries can register as individual entities. Any subsidiaries exceeding the turnover and packaging use (tonnage) thresholds are responsible for their compliance and reporting.
Finally, a parent company can register for some of the subsidiary companies. This option may be useful where some but not all subsidiaries meet the compliance requirements.
Some of your subsidiaries may not meet the turnover and tonnage thresholds individually but do collectively. If so, you must register as a parent company for these and be responsible for their compliance with EPR.
What do you need to do?
Mitigating the Plastic Packaging Tax
Depending on whether you are a small or large organisation, there are four or five steps you may need to take. These potentially include the following:
- Collect and report data regarding your packaging use.
- Create an account with the government and register your organisation.
- Pay a waste management fee.
- Purchase packaging recycling notes (PRNs) to meet recycling obligations.
- Buy packaging waste export recycling notes (PERNs).
- Report your nation data (i.e. locations where your packaging was sold, hired, loaned or discarded).
EPR requirements for small organisations
Packaging users deemed small organisations must record data and report empty packaging and packaged goods. This requirement applies to any packaging used from January 2023. You must supply your 2023 figures between 1 January 2024 and 1 April 2024. You may also need to report nation data.
You can register your business by creating an account with the government/Defra, but the legislation only requires this from January 2024.
You must also pay an annual fee to the environmental regulator, again starting in 2024.
If you fail to do any of this or miss the specified deadlines, you may be subject to fines or penalty charges.
EPR requirements for large organisations
The steps you should take as a large organisation are similar to those for small businesses.
You must also record data regarding your packaging use from January 2023, including nation data. However, large businesses must report data every six months (e.g. January to June 2023 data between July and December 2023, July to December 2023 between January and June 2024 etc.). Missing these deadlines can result in penalty charges.
The increased reporting also means you must create an account and register your business from July 2023.
Besides these requirements, you must also pay a fee to the environmental regulator alongside buying PRNs or PERNs to meet your recycling obligations.
Crucially, you must also pay administrative and waste management fees (often referred to as EPR fees) for any packaging you handle or supply eventually collected from households or street bins by local authorities.
Data declarations under the new scheme
Whether you are a large or small organisation, the EPR will require more detailed reporting of your packaging use. For larger businesses, this reporting also changes from annually to bi-annually.
The increased detail in the figures you must report aims to enable the introduction of modulated fees. Modulated fees target packaging that is more difficult to recycle with higher management fees.
Information required for reporting
There are seven main criteria that businesses are required to report for the Extended Producer Responsibilities for packaging.
- What is the packaging function? Effectively, for what purpose is the packaging used? Figures here cover primary, secondary and tertiary applications.
- The format that the packaging takes. For example, is it a box, bottle, bag, etc.
- What waste stream will the packaging enter at the end of its life? Will the packaging be household or business/industrial in nature?
- The different packaging components that make up a single packaging item. For example, the lid, label and bottle for a drink would have all three elements reported separately. This reporting is similar to how the Plastic Packaging Tax operates.
- Whether there are any elements known as recycling “disruptors”. Materials such as metal, UV inks, varnishes or carbon black colouring can inhibit or prevent recycling.
- Whether packaging contains recycling “enablers” that allow improved sorting and recycling.
- And finally, the colour of the material used.
Further details about your EPR reporting requirements can be found in this guide.
The other information that large and small businesses may need to report is nation data.
This information is effectively in which country, within the UK, your packaging has been sold, hired, loaned or discarded.
If you are within the scope of EPR, then you have a requirement to report nation data if:
- Your business supplies either filled or empty packaging directly to consumers in the UK.
- You supply empty packaging to UK organisations not legally obligated under the EPR regulations.
- Your business hires or loans out reusable packaging.
- You own an online marketplace allowing other businesses to sell either empty packaging or packaged goods to UK consumers.
- Or you import packaging to the UK that your business discards without selling or exporting it.
Similarly to other reporting, if you need to declare nation data, you must do so by December 2024 (for the 2023 calendar year).
What costs might your business incur?
At the time of writing, the fees associated with the Extended Producer Responsibilities have yet to be announced by the government.
However, estimates predict that the overall financial burden to businesses that fall within the scope of EPR to be approximately £1.7 billion. This figure is in contrast to the current £140 million contribution by packaging producers in 2021.
This revenue is to be in addition to charges related to the Plastic Packaging Tax and the upcoming Deposit Return Scheme. The latter initially launches in Scotland in August 2023.
However, the additional data reported as part of the scheme will allow for the introduction of modulated fees from 2025.
This approach will result in lower fees and costs for easy-to-recycle packaging. Conversely, higher charges will apply for packaging that is more difficult or impossible to recycle. These amended fees apply from 2025 for packaging usage in 2024.
Packaging fee modulation aims to encourage packaging producers and users to switch to materials and designs that offer greater recyclability. In effect, it will reward businesses using sustainable packaging or those that take steps to make improvements.
Packaging recovery notes (PRNs)
The existing Packaging Recovery Notes (PRNs) and Packaging Export Recovery Notes (PERNs) will remain in their current format under ERP. The system will continue to cover all forms of packaging.
PRNs and PERNs are effectively certificates proving that packaging waste has been recycled. Businesses falling within the existing Packaging Waste Regulations and the Extended Producer Responsibility must purchase these from accredited re-processors (i.e. those that do the physical recycling) to meet their own recycling responsibility.
EPR compliance schemes
Management of your responsibilities
If all of this seems daunting, it is possible to outsource your compliance to a third-party provider.
Compliance schemes, such as those provided by Valpak, would involve them calculating your obligations, registering your business, paying any fees, and purchasing the required number of PRNs on your behalf.
If you pursue this option, working with a provider on the compliance scheme public register is essential.
Additional costs are involved with such schemes. But they can significantly reduce admin and ensure your business does not incur any penalties for incorrect or late submissions.
Alternatively, if you are a customer of GWP, you can request data regarding your packaging usage to enable you to complete your reporting obligations yourself.
Taking steps to comply with the packaging Extended Producer Responsibility legislation
The likelihood is that if your business handles packaging or sells packaged goods, you will at least need to report your usage under the new regulations. But whether you need to take further action and are liable for increased financial obligation depends on several factors.
If you are still unsure about your business’ requirements under the new Packaging Extended Producer Responsibility scheme, you can download a handy guide to determine what to do.
Alternatively, you can find further information on the government website.
GWP believe this information is correct at the time of publication. The content of this article is also subject to change as the legislation is updated.
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 you pay tax if and where applicable. If in any doubt, please check with your tax advisor.