The UK and the EU count chemically recycled plastic alike at the plant, but differently at the pack

Two rulebooks written in the same year

The UK and EU rules answer the same question: when a used plastic is broken down chemically and mixed with fossil feedstock in a cracker or reactor, how much of the output can be called recycled? Because the molecules cannot be traced, both use mass balance, which allocates recycled inputs to outputs on paper and then audits the books. The Commission’s decision says so in recital 8: mass balance is needed because the proportions of the eligible material in the outputs are generally not known.

The legal homes differ. In the UK the rule sits inside a tax. Section 47 of the Finance Act 2021 makes a finished plastic packaging component chargeable when its recycled plastic is under 30% of its plastic, and sections 49A and 49B, inserted by the Finance Act 2026 with effect from 18 March 2026 for specified purposes, let chemically recycled plastic count as attributed recycled plastic through a mass balance process (legislation.gov.uk; SPI rule PR-GB-001). The draft 2027 regulations fill in the conditions.

In the EU the rule sits inside a target that binds governments. Article 6(5) of Directive (EU) 2019/904 requires Member States to ensure that PET beverage bottles contain at least 25% recycled plastic from 2025, and that all bottles listed in Part F of its Annex contain at least 30% from 2030, each as an average across the national market (SPI rule PR-EU-016). Decision 2026/1425 sets how that average is calculated, checked and reported.

The timing has been close. HMRC first consulted on chemical recycling and mass balance in July 2023 and confirmed the approach in a policy paper on 26 November 2025. Member States’ representatives in the Waste Technical Adaptation Committee backed the bottle method in February 2026, according to the Commission’s press release of 30 June 2026 and S&P Global’s report of 9 February 2026 (Exhibit 2).

SPI’s news report of 30 October covered HMRC’s separate decision on certification for mechanically recycled plastic from 1 April 2030. That outcome says the mechanical approach aligns with the treatment of chemically recycled plastic and the use of a mass balance approach, but it does not say that mass balance will be allowed for mechanical recycling. This piece stays with the chemical route, where the rules are already drafted in both jurisdictions.

Where the two methods agree

The period. HMRC’s draft regulation 3 defines the balancing period as the three months starting with the day a certified person is granted a certificate, followed by successive three-month periods. Article 7(7) of the EU decision sets three months as the maximum period for mass balance accounting and lets a positive balance be carried into the next period. A recycler can therefore run one quarterly ledger for both, provided its UK periods start on its UK certificate date.

The fuel rule. Both texts exclude plastic that ends up as fuel. The EU decision gives fuels and losses a dual-use factor of 0 in Article 7(5)(c), and recital 24 describes the approach as fuel-use excluded, linked to the definition of recycling in Article 3(17) of the Waste Framework Directive. HMRC’s reference document applies what it calls the fuel-excluded attribution method, under which fuel-use products get a factor of 0 and non-fuel products a factor of 1 (Exhibit 6).

The allocation. The EU decision requires, in Article 7(5)(a), that the relative share of eligible material in each output equals its share in the input, before the dual-use factors are applied. HMRC’s draft regulation 3 sets out its own formula, with a conversion factor shown only as an image in the accessible version, and requires the share of consumed fuel to which recovered material is attributed to match the share of qualifying input in the mixture. SPI has not yet confirmed whether the UK formula is fully proportional for non-fuel outputs, because the conversion factor is not in the accessible text.

The auditor. Neither government runs certification. The EU decision relies on accredited conformity assessment bodies under Regulation (EC) No 765/2008, with annual facility-level audits for plants that process non-polymer material and every three years for small and medium-sized enterprises (Article 8(5) and (9)). HMRC’s draft regulation 8 requires schemes to use certification bodies accredited by a body that is a full member of Global Accreditation Cooperation Incorporated and meets standards set by HMRC.

Where they split: transfers, the unit and the feedstock

Transfers between sites. This is the sharpest difference. Article 7(8) of the EU decision requires mass balance accounting for each facility and says attributed amounts cannot move between facilities or companies. HMRC’s draft regulation 4 allows an attribution under a receiving process if the transferring and receiving processes are run by the same undertaking or a group undertaking, and the sites are connected by a pipeline meeting requirements in an HMRC notice. Draft regulation 3 also treats every mass balance process on a single site as one process, and defines a site as the whole area under a certified person’s control, with areas separated only by a road, railway or inland waterway counted as one.

The unit measured. The UK tax is charged component by component. HMRC’s guidance on packaging in and out of scope lists bottle tops or caps and labels among plastic packaging, and says the lids of yoghurt and soup pots are separate packaging components in their own right. The EU decision defines a beverage bottle as including its cap, lid, label and sleeve, if any, and counts every plastic part in both the plastic weight and the recycled weight (Article 1(3); SPI rule PR-EU-015 on tethered caps).

The feedstock. The EU decision counts only plastic that was post-consumer waste, and recital 15 excludes plastic and waste from manufacturing, testing, storage and transfers before a product reaches the market. In the UK, pre-consumer plastic stops counting as recycled plastic from 1 April 2027 under HMRC’s policy paper of 26 November 2025. Section 49A of the Finance Act 2021 defines qualifying input material as recovered material or material to which recovered material was attributed under an earlier mass balance process; SPI has not yet confirmed how the April 2027 removal of pre-consumer plastic applies to feedstock entering a UK mass balance process.

Origin. The EU decision counts recycled plastic recycled in the EU now, and from 21 November 2027 also post-consumer plastic recycled in countries covered by the OECD decision; other third countries count only under EU agreements or arrangements (Article 1(1); recitals 18 and 19). The Commission’s press release refers to material from the Union and EEA countries in the first phase. HMRC’s draft regulations do not set an origin rule for chemically recycled feedstock, and SPI found none in the accessible text.

One bottle, two answers

The difference in units is easiest to see on a single bottle. SPI used an illustrative half-litre PET drinks bottle: an 18.0 gram PET body, a 2.0 gram HDPE cap and a 0.5 gram plastic label, 20.5 grams of plastic in all. These are SPI assumptions, not a company’s figures. Only the body contains recycled PET.

Under the EU method, the bottle’s recycled share is the recycled weight over all plastic weight. A body at 30% recycled PET holds 5.4 grams of recycled plastic, which is 26.3% of 20.5 grams, by SPI’s calculation. The same bottle sits above the 25% PET figure for 2025 but below 30% (Exhibit 4). A body at 100% recycled PET gives 87.8%, because the cap and label stay virgin.

Under the UK tax, the same bottle is three tests, not one. The body at 30% passes on its own. The cap and label, at 0% recycled, are chargeable components for whichever registered business manufactures or imports them. SPI has not yet confirmed whether HMRC treats every beverage bottle cap and label as a separate component in practice; HMRC’s guidance gives examples rather than a full method, and says it does not list all packaging.

For a line of 100 million such bottles a year, the caps weigh 200 tonnes and the labels 50 tonnes. At GBP 236.56 per tonne from 1 April 2027, that is GBP 47,312 on the caps and GBP 11,828 on the labels, GBP 59,140 in all, by SPI’s calculation (Exhibit 5). The 1,800 tonnes of bodies pay nothing at 30%. If the bodies slipped to 29%, they would pay GBP 425,808, because the UK tax falls on the whole weight below the line.

The dual-use factor: the number that decides the yield

Most chemical recycling routes send used plastic through pyrolysis or a similar process, producing an oil or gas that is then cracked alongside fossil feedstock. Some of that output becomes polymer precursors, some becomes fuel, and some can go either way. The dual-use factor decides how much of a mixed output can carry recycled credit.

HMRC’s reference document, version 0.1 dated September 2026 and published on 6 October, sorts outputs into three classes. It says output products are classified as fuel-use, non-fuel or dual-use products. For a steam-crackable dual-use product, the plant sets its maximum acceptable boiling point, reads the product’s boiling range against it and takes the crackable share as the factor. For heavy or solid outputs, it must evidence the share that stays on a technically feasible recycling route.

The EU decision is stricter on solids. Under Article 7(5)(c), solid dual-use outputs get a factor of 0, and liquid or gaseous dual-use outputs count only for the share the operator can prove stays on the recycling route. Recital 24 gives the reason: solid outputs such as char are not expected to become high-value non-fuel products at scale.

The UK defaults matter more than they look. HMRC’s consultation page says the default values will be confirmed before the final legislation and reference document are published, and Annex A of version 0.1 contains only placeholders. Until the defaults are set, no UK buyer can be sure how much attributable plastic a given plant will be able to sell per tonne of feedstock (Exhibit 10).

Certificates, audits and the paper trail

Both systems end in a certificate that travels down the supply chain, and both make the buyer part of the chain of custody.

In the UK, draft regulation 13 requires a certified person to obtain supplier attribution declarations and certificates, to carry out appropriate due diligence on what suppliers send and to report suspected supplier non-compliance to the scheme operator. If a supplier’s certificate is later suspended or withdrawn, that event is disregarded for a buyer that complied. Draft regulation 15 requires a public, searchable database of certified persons, products and certificate numbers, updated within one week of any issue, suspension or withdrawal.

In the EU, Article 8 of the decision has Member States check reported data on a risk basis and recognise certificates issued in other Member States. Certificates are valid for one year, or three years for small and medium-sized enterprises, and converters pass them downstream with batch declarations (Article 8(9) and (10); SPI rule PR-EU-016).

HMRC is explicit that much of the operating detail is still to come. Its consultation page says the notices are generally expected to reflect relevant industry and ISO standards.

How much UK tonnage the evidence rules reach

The UK change lands on a large base. HMRC’s statistics commentary, updated on 27 August 2026, records 2,970 thousand tonnes of plastic packaging declared in 2025-26, of which 1,580 thousand tonnes were made in the UK and 1,390 thousand tonnes imported. Of the total, 1,506 thousand tonnes were relieved at 30% or more recycled content and 1,107 thousand tonnes were taxable, with accrued receipts of GBP 250 million and 5,142 registered businesses at 13 August 2026 (Exhibit 8).

HMRC does not publish how much of the relieved tonnage relies on chemically recycled plastic, and before April 2027 no attributed plastic can count. HMRC’s policy paper of 26 November 2025 says the combined measure is expected to have a negligible impact on the Exchequer. Read with the statistics, that suggests HMRC does not expect mass balance to move large tonnages across the line in the first years; SPI has not yet confirmed any HMRC estimate of attributed tonnage.

For imports, the lack of an origin rule in the UK draft is notable. An importer whose overseas supplier holds a mass balance certificate will still need a certificate from a scheme meeting HMRC’s minimum standards, and HMRC’s outcome on mechanical recycling says it will consider how overseas accreditation and recognised standards may be taken into account. SPI has not yet confirmed whether any existing international scheme will be recognised for the 2027 chemical route.

A framework: four buyer positions

The two regimes create four practical positions for a packaging buyer, depending on where the pack is sold and which recycling route supplies it. SPI built them from the rules in Exhibits 1 to 7; they describe exposure, not compliance status (Exhibit 9).

Position A is the most common today. Most UK claims rely on mechanical recycling, as HMRC’s consultation outcome of 28 October 2026 records, and recycled PET bottles are the clearest case. The buyer’s job is to hold part-level data, because the UK needs it per component and the EU per bottle.

Position B is where mass balance makes the biggest difference in the UK, because flexible films and food-contact trays have little mechanical food-grade supply. SPI’s Ledger on PPWR recycled content targets set out why non-PET food packs depend on chemical recycling in the EU too.

Position C applies to EU bottlers buying chemically recycled PET. The facility rule means a certificate must tie the attributed amount to the plant where the mass balance ran, and the buyer cannot rely on credits pooled across a group’s plants.

Position D is the one to watch. A recycler with two linked plants in the UK could, under draft regulation 4, move attributed amounts from one to the other for UK tax purposes. If that material were also sold into an EU bottle, the transfer would not be valid under Article 7(8) of the EU decision. Buyers in this position need certificates that state whether any transfer took place.

Scenarios: what one batch of feedstock is worth under the UK tax

The value of mass balance to a UK buyer depends on how much attributable plastic a plant can produce per tonne of waste input, and that depends on yield and the dual-use factor. SPI modelled 1,000 tonnes of post-consumer feedstock in one balancing period under three sets of assumptions (Exhibit 10).

The spread is wide: the high case supports about 71% more component tonnage than the low case, by SPI’s calculation, from the same feedstock. That is why the default dual-use factors are the most important open number in the UK draft. Under the EU decision, the same plant would face a factor of 0 on any solid dual-use output and no transfer between facilities, so its EU attributable tonnage would tend to be equal to or lower than its UK figure on the same accounts, subject to the UK conversion factor SPI has not yet confirmed.

The UK figures assume the components sit exactly at 30%. A converter that targets 35% to keep a safety margin can cover only 1,600 tonnes of components with the base case’s 560 tonnes, by SPI’s calculation, so the tax kept off falls to GBP 378,496. The margin is a cost of the cliff design.

What the Commission still has to decide

The bottle decision is not the end of the EU story. Article 7 of Regulation (EU) 2025/40, the PPWR, sets recycled content floors for plastic packaging from 2030, and its counting rules are still being written. The Green Forum timeline lists three acts due on 31 December 2026: an Article 7(8) implementing act on the methodology for calculating and checking recycled content, an Article 7(9) delegated act on sustainability criteria for plastic recycling technologies, and an Article 7(10) implementing act on the equivalence of rules in third countries. LexisNexis reported that the Commission opened consultations on the three acts on 18 August 2026, closing on 16 September 2026.

Recital 32 of Decision 2026/1425 says the Commission should consider aligning the bottle method with the provisions of Article 7(8) of the PPWR, where appropriate. Recital 33 points the other way: it says the PPWR method should reflect that Regulation’s own legal basis and objectives, and that the bottle method should apply only to its own product category. Article 2(1) of the decision calculates the share for PET bottles, and the Commission’s press release describes bottles made mainly of PET.

For the 30% all-bottle average from 2030, which covers HDPE and other non-PET bottles, SPI has not yet confirmed which counting method will apply. SPI’s Ledger on recycled content pledges compared brand targets with these legal floors, and Ledger 17 modelled how a late Article 7(8) act could move the PPWR start date. Neither is repeated here.