Businesses intending to use chemically recycled plastic to meet Plastic Packaging Tax (PPT) recycled content requirements have been given greater clarity following the publication of new guidance from HMRC.

The updated guidance confirms how a mass balance approach (MBA) can be used to account for chemically recycled plastic content in plastic packaging for PPT purposes from 1 April 2027. The new framework introduces certification, record-keeping and audit requirements that organisations across the supply chain will need to meet if they wish to attribute chemically recycled content towards the 30% recycled content threshold.

HMRC guidance can be found via the following links:

• Preparing to use a mass balance approach for Plastic Packaging Tax
• Minimum certification requirements for a mass balance approach for Plastic Packaging Tax

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What Has HMRC Announced?

HMRC has confirmed that any business using a mass balance approach to demonstrate recycled content from chemically recycled plastics must do so through a third-party approved certification scheme that meets HMRC's minimum requirements. The requirements apply throughout the supply chain, with all relevant businesses expected to hold the appropriate certification. Importers of finished plastic packaging will also need evidence that their suppliers are certified under a compliant scheme.

The guidance is designed to provide a consistent and auditable method for tracking chemically recycled material through complex manufacturing processes where physical segregation of recycled and virgin feedstocks may not always be possible. While chemically recycled content can be attributed to packaging using a mass balance system, businesses will be required to maintain robust controls and clear documentation to support any claims

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Key Requirements for Businesses

Under the new rules, businesses using a mass balance approach will be required to:

• Operate a site-level mass balance system with a three-month accounting period.
• Ensure no negative mass balance occurs at any point.
• Apply site-specific conversion factors during processing.
• Use the fuel-excluded attribution method where outputs include fuel-use products.
• Maintain valid certification and supporting documentation.
• Retain attribution declarations and mass balance records for at least six years.
• Obtain a new attribution declaration each time material changes ownership within the supply chain.
• Undergo certification audits conducted by accredited certification bodies under approved schemes.

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What is a Site-Level Mass Balance System?

A key aspect of HMRC's approach is the requirement for a site-level mass balance system. This means that recycled material entering a manufacturing site must be tracked and matched against the recycled content attributed to products leaving that same site, rather than being balanced across multiple facilities within a wider business.

To demonstrate compliance, operators will need detailed records covering:

• Quantities of chemically recycled material received.
• Processing losses and conversion factors used.
• Quantities of recycled content attributed to finished products.
• Opening and closing stock levels.
• Inputs and outputs of both recycled and virgin materials.

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Who is Affected?

The guidance will only affect businesses that intend to use a mass balance approach for chemically recycled plastic when calculating recycled content for Plastic Packaging Tax purposes from April 2027. Companies that rely solely on mechanically recycled plastic will not be impacted by these requirements.

Manufacturers, converters, packaging producers and importers should now review their current systems and supply chain arrangements to assess whether additional certification, documentation or process controls will be required ahead of implementation.

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Looking Ahead

The publication of these requirements marks an important step in HMRC's efforts to establish a recognised framework for chemically recycled plastics within the Plastic Packaging Tax regime. Businesses planning to utilise chemically recycled feedstocks should begin preparing now, ensuring that their mass balance systems, record-keeping processes and certification arrangements align with the new requirements ahead of the April 2027 implementation date.

For further information, HMRC has published guidance on preparing to use a mass balance approach and the minimum certification requirements that certification schemes must meet.