England’s packaging and recycling reforms have moved from announcement into active delivery. The £1.1 billion originally guaranteed to English councils for 2025–26 under Extended Producer Responsibility for Packaging (pEPR) was part of the first year of a wider UK scheme that PackUK says secured around £1.4 billion for local authorities across the UK.
The reforms have progressed further in 2026. Simpler Recycling requirements for households in England took effect on 31 March 2026, while PackUK’s latest operational plan forecasts approximately £1.169 billion in chargeable packaging disposal costs for English local authorities in 2026–27. Producer fees are also moving into a new phase in which recyclability directly influences how much liable businesses pay.
Why Is the Government Changing the Way Recycling Is Funded?
Until now, the cost of collecting and processing packaging waste has been paid largely by local councils and, in turn, by taxpayers. However, under the Extended Producer Responsibility (EPR) for Packaging scheme, that responsibility shifts to the businesses producing the packaging materials in the first place.
This model ensures that those who contribute to waste generation also contribute to its solution.
The funding shift is now operational rather than simply proposed. Under pEPR, liable packaging producers help fund the costs local authorities incur managing household packaging waste, moving those costs away from taxpayers and creating a financial incentive to reduce unnecessary packaging.
From the 2026–27 assessment year, recyclability also has a direct impact on producer disposal fees. Packaging is assessed using PackUK’s Recyclability Assessment Methodology and classified as green, amber or red. Less recyclable red-rated packaging attracts higher fees, while more recyclable green-rated packaging receives a discount.
How Will the £1.1 Billion Be Used by Local Councils?
The original £1.1 billion figure related to the government guarantee for English local authorities in 2025–26. The scheme has now entered its second year, and PackUK’s August 2026 operational plan forecasts approximately £1.169 billion of chargeable disposal costs for England in 2026–27, with around £1.47 billion forecast across all four UK nations.
PackUK has issued Year 2 notices of assessment to local authorities, setting out the payments it anticipates making and how those amounts have been calculated.
Funding is intended to support the efficient management of household packaging waste, including collection, sorting, recycling and related waste-management services.
Oversight has also become clearer. The government reports that PackUK has been instructed to recover pEPR money paid to local authorities where it is not spent on waste-management services, strengthening accountability over how producer-funded payments are used.
What Will Businesses Need to Do Under the New Rules?
Not every business using packaging automatically pays pEPR disposal fees. Large producers generally fall within the full obligations where they have annual turnover of more than £2 million and supply or import more than 50 tonnes of packaging in the UK, although businesses should check the detailed producer rules because responsibility depends on their role in the packaging supply chain.
For 2026–27, pEPR is moving from Year 1 base fees to modulated disposal fees based on packaging recyclability.
| RAM Rating | 2026–27 Treatment |
|---|---|
| Green | Discounted disposal fee |
| Amber | Base disposal fee |
| Red | 20% above the base disposal fee |
PackUK has set the red modulation factor at 1.2 for 2026–27, rising to 1.6 in 2027–28 and 2.0 in 2028–29. The green discount is funded through the additional amounts collected from red-rated packaging.
Do not present 2026–27 per-tonne rates as final yet. PackUK’s operational plan published on 10 August 2026 says confirmed Year 2 disposal fees cannot be calculated until producer data has been received and checked, with the calculation now expected in November 2026.
How Will This Affect the UK Economy and Green Jobs?
The economic potential remains significant, but the figures should be presented as industry projections rather than confirmed government outcomes.
Leaders of major UK waste-management companies have said the packaging reforms could support around 25,000 jobs and stimulate more than £10 billion of investment in recycling capability over the next decade.
Demand could therefore grow across recycling infrastructure, materials engineering, logistics, packaging redesign, recyclability assessment and waste-data technology.
For startups, the opportunity is increasingly tied to helping producers meet practical compliance requirements rather than simply preparing for future legislation.
PackUK also published RAM 2027 on 1 July 2026, providing the framework producers will use to assess packaging placed on the market in 2027.
Businesses developing packaging materials, testing services and compliance technology should therefore account for changing recyclability standards as the scheme evolves.
As recycling services expand, there will be rising demand for engineers, data analysts, materials scientists, logistics experts, and environmental consultants.
For startups, particularly in the circular economy, this creates a significant opportunity to scale technologies that help businesses comply with EPR rules or deliver sustainable alternatives.
What Do Industry Leaders and Local Councils Think?
Government ministers, waste management companies, and local authorities have broadly welcomed the reforms. Minister Mary Creagh emphasised that this is part of ending Britain’s “throwaway society” and building a recycling-first culture.
Veolia UK, one of the country’s largest waste operators, called the scheme a necessary foundation for investing in domestic infrastructure and decarbonisation.
The Local Government Association recognised the benefit of shifting the cost burden away from councils, which have managed recycling services under financial strain for years.
Others, such as the Food and Drink Federation and the Environmental Services Association, acknowledged that while the EPR regime will increase compliance costs for businesses, it is a fair and overdue correction that will ultimately benefit consumers, councils, and the environment.
What Comes Next in the UK’s Packaging Reform Plan?
Several measures that were future plans when this article was first written have either come into force or have clearer implementation dates.
| Initiative | Current 2026 Status | What It Means |
| Simpler Recycling for larger workplaces | In force since 31 March 2025 | Standard recyclable waste streams must be separated |
| Simpler Recycling for households | In force since 31 March 2026 | More consistent household recycling collections across England |
| Plastic films and bags | From 31 March 2027 | Must be collected with plastic recycling |
| Simpler Recycling for micro-businesses | From 31 March 2027 | Requirements extend to workplaces with fewer than 10 FTE employees |
| Deposit Return Scheme | 1 October 2027 | Refundable deposits on eligible single-use drinks containers |
| Circular Economy Growth Plan | Still forthcoming in August 2026 | Government says the plan is being finalised and will be published soon |
The Deposit Return Scheme is particularly important to update. The planned launch is now specifically 1 October 2027 for eligible PET plastic, aluminium and steel drinks containers between 150ml and 3 litres in England and Northern Ireland, with aligned arrangements being developed elsewhere in the UK.
What Does This Mean for UK Startups?
This is a pivotal moment for startups working on packaging innovation, recycling technology, and sustainability consultancy.
As producers look for cost-effective ways to comply with EPR and reduce fees, startups that offer eco-design services, packaging alternatives, or digital tracking for waste compliance are likely to see increased demand.
Moreover, startups developing smart recycling infrastructure, AI-driven material sorting, or community-level collection solutions can now position themselves as key partners for councils or private waste firms investing their share of the £1.1 billion.
With long-term investment flowing into the sector and legislation that rewards sustainable design, the UK’s circular economy is no longer just an environmental ambition it’s a startup opportunity.
Conclusion
The UK’s packaging reforms have progressed substantially since the original £1.1 billion announcement in July 2025. Producer-funded recycling is now operational, household Simpler Recycling requirements are in force across England, and the pEPR system is entering its first year of recyclability-based fee modulation.
For businesses, the focus is shifting from preparing for EPR to managing real reporting, packaging-design and cost implications.
For councils and recycling businesses, the reforms provide a longer-term source of funding for packaging waste services, with PackUK forecasting about £1.169 billion in chargeable disposal costs for England during 2026–27.
Further changes, including plastic-film collections and the Deposit Return Scheme, will make 2027 another major implementation year.
FAQ
What Is Extended Producer Responsibility for Packaging?
pEPR makes liable packaging producers contribute towards the cost of managing household packaging waste instead of leaving those costs primarily with councils and taxpayers.
Are Councils Receiving £1.1 Billion in 2026?
The £1.1 billion figure was the guaranteed amount for English councils in 2025–26. For 2026–27, PackUK currently forecasts approximately £1.169 billion of chargeable disposal costs for England.
When Did Simpler Recycling Start for Households?
The household requirements came into force in England on 31 March 2026, requiring separate collection of specified recyclable, food and residual waste streams.
How Are EPR Packaging Fees Changing in 2026?
Fees are being modulated according to recyclability. Red-rated packaging faces a 20% uplift in 2026–27, amber remains at the base rate and green packaging receives a discount.
Have the Final 2026–27 Producer Fees Been Confirmed?
Not yet. PackUK’s August 2026 operational plan says Year 2 disposal fees are expected to be calculated in November 2026 after producer data has been checked.
Which Businesses Have to Pay pEPR Disposal Fees?
Large producers supplying household packaging generally face disposal fees where turnover exceeds £2 million and packaging supplied or imported exceeds 50 tonnes, subject to the detailed producer rules.
When Will the UK Deposit Return Scheme Start?
The Deposit Return Scheme is scheduled to launch on 1 October 2027, introducing refundable deposits on eligible single-use PET plastic, aluminium and steel drinks containers.
