Since April 2022 the Plastic Packaging Tax has charged £217.85 per tonne on packaging with less than 30 % recycled content. For a small food producer making 25 tonnes a year that is an extra £54,000 tax bill. A cosmetics firm using 8 tonnes pays £17,000. The Food and Drink Federation’s 2025 survey shows 44 % of manufacturers with turnover under £25 m say the tax is forcing price rises or job cuts. Many simply cannot source enough recycled plastic at viable cost or quality.
Large corporations negotiated long-term contracts with recyclers years ago. Small firms are left fighting for scraps. The result? British producers become uncompetitive against EU imports that face no equivalent tax. Exports of packaged goods fell 9 % in real terms in 2024–25 (HMRC).
The tax raised £280 million last year – a drop in the ocean compared to the damage it is doing to domestic manufacturing.
We need two immediate changes:
- Full exemption for any business using less than 10 tonnes of plastic packaging per year – covering 87 % of affected SMEs at a cost of only £42 million in lost revenue.
- A £200 million Recycled Material Transition Fund over three years. Grants of £10,000–£50,000 to help small producers install washing lines, buy recycled resin, or switch to paper/board alternatives.
This is not about abandoning recycling targets; it is about fairness. Germany, France, and Spain all exempt small producers or subsidise the switch. Britain punishes them.
Without urgent reform, thousands of small manufacturers will either close, offshore production, or lose market share to imports. British jobs, British innovation, and British tax revenue will disappear.
Exempt small users and fund the transition. Save our manufacturers before it is too late.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
Join today from just £5/month or £40/year and help to support pro-SME candidates.
Together we can make a difference.