HMRC Evaluation Links Plastic Packaging Tax to Investment in Products and Machinery

An HMRC evaluation has found that some packaging manufacturers have responded to Plastic Packaging Tax through investment in new products, production processes, and machinery, alongside changes to recycled content.

Published on 28 October 2026, the report examines how the tax has influenced business decisions since its introduction in April 2022. It identifies investment responses among manufacturers, while cautioning that the tax operates alongside customer requirements, commercial pressures, and wider environmental regulation.

Manufacturers Report Investment Responses

Across the 169 manufacturers included in the investment analysis, 33% reported at least one investment due to Plastic Packaging Tax.

That proportion increased to 49% among the 107 manufacturers who said the tax had influenced their plastic packaging strategy. Within this group:

• 30% reported developing packaging products that were new to their business.
• 22% invested in new plastic production methods or processes.
• 20% invested in new machinery or equipment for packaging production.
• 11% invested in new technology or software systems.
• 10% developed packaging products that were wholly new to the market.

Businesses could report more than one investment, so these percentages should not be added together.

HMRC cautions that the manufacturer sample was relatively small. The findings also reflect businesses’ own assessments of their responses to the tax, rather than establishing that the tax was the sole cause of investment.

Packaging Changes Extend Beyond Recycled Content

The evaluation also identified changes to packaging design, weight, and material choice.

Across the wider survey of 1,011 businesses, 27% reported piloting or testing alternative packaging options because of the tax. A further 26% reported using lighter or less voluminous packaging, while 22% had changed packaging design or size to reduce plastic use.

However, 38% reported none of the listed packaging changes, demonstrating that responses varied considerably across the market.

For UK processors, toolmakers, machinery suppliers, and packaging development specialists, the investment findings indicate that some manufacturers are responding through changes to production capability as well as material specifications. The report does not quantify the value of these investments or establish a market-wide increase in equipment demand.

Costs and Technical Requirements Shape Decisions

The evaluation found that half of surveyed businesses passed some or all Plastic Packaging Tax costs to customers.

Material availability, quality, and the relative price of recycled and virgin plastic also affected businesses’ ability to change their packaging. Some interviewees reported that recycled materials remained sufficiently expensive to make paying the tax more economical than changing materials.

Safety, performance, and regulatory requirements created further constraints, particularly in food, pharmaceutical, and medical applications.

Positive Effects, but an Uneven Response

Overall, HMRC concluded that the tax had made a moderately positive contribution to business behaviour and environmental outcomes. Its clearest finding was an increase in packaging meeting the 30% recycled content threshold.

However, changes were concentrated among a subset of businesses. The evaluation found limited evidence that increased demand for recycled plastic had translated into a substantial supply response across the recycled plastics market.

The findings therefore point to investment and product development among some manufacturers, while showing that wider costs, technical requirements, and customer expectations continue to shape packaging decisions.