HMRC: Plastic Packaging Tax Chemical Recycling Mass Balance Draft Rules

• HMRC has opened a technical consultation on draft regulations for a Plastic Packaging Tax mass balance approach for chemically recycled plastic.
• These regulations will establish conditions for businesses to use this methodology for PPT purposes starting April 1, 2027.
• The consultation closes on December 21, 2026, seeking feedback on the drafting and technical application of the rules.
• The framework includes requirements for certification, auditing, monitoring, and record-keeping, building on sections 49, 49A, and 49B of the Finance Act 2021, as amended by the Finance Act 2026.
• A reference document will guide the application of dual-use factors for refinery and petrochemical output products, with default values to be confirmed.

It is imperative to thoroughly review these draft regulations and the proposed mass balance methodology to prepare for new compliance responsibilities, including stringent certification, auditing, and record-keeping requirements, which become effective from April 1, 2027.

His Majesty's Revenue and Customs (HMRC) has launched a technical consultation, inviting feedback on draft regulations and an accompanying reference document concerning the Plastic Packaging Tax (PPT) and the adoption of a mass balance approach for chemically recycled plastic. This initiative aims to establish the conditions businesses must satisfy to utilize this mass balance methodology for PPT calculations, specifically for chemically recycled plastic, starting from April 1, 2027. The consultation period is open until 11:59 PM on December 21, 2026.

The draft regulations and the supporting reference document should be reviewed in conjunction with the relevant sections of the Finance Act 2021, which were subsequently amended by the Finance Act 2026. Specifically, sections 49, 49A, and 49B of these acts form the foundational legal basis for these new provisions. The detailed conditions for using a mass balance approach encompass various aspects, including the attribution methodology, certification processes, auditing standards, monitoring procedures, and comprehensive record-keeping obligations.

Furthermore, the draft regulations indicate that additional operational specifics will be outlined in future notices published by HMRC. These forthcoming details are anticipated to align with established industry practices and relevant ISO standards, providing a standardized approach for compliance. Businesses involved in plastic packaging, particularly those utilizing or planning to incorporate chemically recycled plastic, are the primary audience for this consultation, given the significant changes to compliance obligations.

A crucial component of the new framework is the reference document, titled 'Dual-Use Factors for Refinery and Petrochemical Output Products.' This document provides guidance on classifying output products, determining the appropriate dual-use factor (DUF) for each product, and specifying instances where default values can be applied. The final default values will be officially confirmed and published prior to the release of the definitive legislation and reference document.

This development is particularly significant for lawyers and compliance officers advising businesses engaged in plastic packaging, especially those considering or already using chemically recycled materials. It is imperative to thoroughly review these draft regulations and the proposed mass balance methodology to prepare for new compliance responsibilities, including stringent certification, auditing, and record-keeping requirements, which become effective from April 1, 2027. Participating in the consultation by submitting feedback is also a critical step for affected stakeholders.

Lawyers and compliance officers advising businesses involved in plastic packaging, especially those using or planning to use chemically recycled plastic, must review these draft regulations and the proposed mass balance methodology. This is crucial to prepare for new compliance obligations, including certification, auditing, and record-keeping, effective from April 1, 2027, and to consider submitting feedback to the consultation.

Source: Original reporting via GOV.UK