HM Revenue & Customs (HMRC) has published new guidance explaining how businesses can use a mass balance approach for chemically recycled plastic under the UK Plastic Packaging Tax (PPT).
Published on 28 August 2026, the guidance is designed to help businesses prepare for the new framework that will apply from 1 April 2027, when chemically recycled plastic attributed through an eligible mass balance system can be accounted for as recycled content for Plastic Packaging Tax purposes. (GOV.UK)
The new requirements are particularly relevant to plastic packaging manufacturers, importers and businesses operating throughout chemical recycling supply chains.
What Is the Mass Balance Approach for Plastic Packaging Tax?
A mass balance approach allows the proportion of chemically recycled plastic entering a production process alongside virgin plastic to be attributed to specific plastic packaging outputs.
Because virgin and chemically recycled feedstocks can become physically indistinguishable after chemical recycling and subsequent processing, the mass balance methodology provides a system for tracking and allocating recycled content through the supply chain.
When Will the New Mass Balance Rules Apply?
The new rules will take effect on 1 April 2027.
From this date, businesses that want to account for chemically recycled plastic in their Plastic Packaging Tax returns will need to use an eligible mass balance approach.
Using the approach is optional. However, where a business does not use the mass balance system, its chemically recycled plastic will be treated as non-recycled or virgin plastic for PPT purposes.
Chemically Recycled Plastic and the 30% PPT Threshold
Under the UK Plastic Packaging Tax framework, qualifying plastic packaging containing at least 30% recycled plastic by weight can benefit from the relevant PPT exemption.
From 1 April 2027, chemically recycled plastic attributed using an eligible mass balance approach can contribute towards meeting this 30% recycled content threshold, provided the applicable conditions and certification requirements are satisfied.
This represents an important development for businesses investing in chemical recycling technologies and sustainable packaging strategies.
Which Businesses Will Be Affected?
The new HMRC guidance is particularly relevant to businesses that:
- manufacture plastic packaging components in the UK using chemically recycled plastic;
- import finished plastic packaging components manufactured using chemically recycled plastic; or
- operate within the chemical recycling and plastic packaging supply chain.
Businesses that only need to account for mechanically recycled plastic cannot use the new mass balance approach and should continue using the existing method for determining recycled plastic content.
Third-Party Certification Will Be Required
Any chemically recycled plastic attributed using a mass balance approach must be covered by a third-party certification scheme that meets the minimum requirements established for Plastic Packaging Tax.
Alongside the main guidance, HMRC has published detailed minimum certification requirements for businesses, certification scheme operators and certification bodies.
HMRC does not directly regulate the certification schemes. However, schemes and certification bodies must satisfy the applicable minimum requirements if their certificates are to be used as evidence for PPT purposes.
Certification Across the Supply Chain
Certification requirements extend beyond the final plastic packaging manufacturer.
Businesses throughout the relevant supply chain, from the point where plastic waste enters chemical recycling through to completion of the plastic packaging component manufacturing process, must meet the applicable certification requirements.
If a business within the relevant supply chain is not appropriately certified, the attributed chemically recycled plastic cannot be accounted for using the mass balance approach in the Plastic Packaging Tax return.
What Records Must Businesses Keep?
Businesses using the mass balance approach will need to maintain robust traceability and documentation systems.
Required records include:
- valid certification documents;
- attribution declarations for individual material batches;
- applicable site-specific mass balance records;
- evidence of supplier certification;
- supply chain and due diligence records.
Businesses must retain the relevant written or electronic records for six years.
Attribution Declarations for Each Batch
When attributed chemically recycled material moves between businesses in the supply chain, an attribution declaration must accompany each relevant batch.
The declaration provides evidence of the amount of attributed chemically recycled material being transferred and the businesses involved in the transaction.
Recipients are responsible for checking that the attribution declarations they receive are complete and valid. Incomplete documentation may prevent recycled content from being used to support a Plastic Packaging Tax exemption claim. (GOV.UK)
Three-Month Mass Balance Accounting Period
Businesses requiring certification must operate a site-level mass balance system.
Under HMRC’s minimum certification requirements, businesses must use a three-month mass balance accounting period, with no negative balance permitted at any point during that period.
Businesses may also need to apply site-specific conversion factors to account for processing losses and follow specified attribution methodologies depending on their production processes.
What Are the Requirements for Importers?
Businesses that only import finished plastic packaging components to which chemically recycled content has been attributed through a mass balance approach may not themselves need to be certified in all cases.
However, importers must still:
- verify that the relevant supply chain is appropriately certified;
- check their supplier’s certification;
- obtain and verify attribution declarations; and
- retain sufficient evidence to support the recycled content claimed in their PPT return.
What Does This Mean for Plastic Packaging Companies?
The introduction of the mass balance approach creates a new route for chemically recycled plastic to contribute towards recycled content calculations under the UK Plastic Packaging Tax, while introducing additional certification, traceability and record-keeping requirements.
Ahead of 1 April 2027, businesses using chemically recycled plastic should consider:
- identifying chemical and mechanically recycled content within their packaging;
- reviewing certification across their supply chains;
- selecting an eligible third-party certification scheme;
- establishing site-level mass balance accounting systems where required;
- implementing attribution declaration procedures;
- preparing appropriate due diligence and record-keeping processes.
HMRC has confirmed that further detailed guidance will be published in early 2027 ahead of implementation. Businesses manufacturing or importing plastic packaging for the UK market should therefore continue monitoring the development of the new Plastic Packaging Tax requirements.