BHETA is actioning an urgent Government lobbying initiative, via a joint campaign with members to tackle DEFRA on the upcoming Extended Producer Responsibility (EPR) scheme.
This follows the department’s publication of the first set of illustrative fees on 15 August, which shows a planned tax increase of 887%.
Analysis of five random BHETA members by Wastepack, a recognised waste compliance scheme provider, shows that collectively these businesses pay a total packaging tax bill of £26,844 under the current PRN regulations. Under the new EPR plans, Wastepack’s calculations shows the ‘mid-range’ of the new planned tax is £264,861 – an extra £238,000, representing an increase of 887%. The ‘High’ end forecast is a bill of £350,061, or £70,000 each.
BHETA’s chief operating officer, Will Jones explained: “BHETA has been alarmed by the scale of the tax burden on producers that EPR represents. Along with many other bodies, we have consistently highlighted the weaknesses of the scheme which prompted the last Government to delay the scheme in 2023.
“EPR is now back on the table and proposed rates of tax are punitive for individual businesses and the UK economy. Pressure must be applied to reduce rates and devise a fairer scheme ahead of this Autumn’s budget.”
The EPR scheme is an additional tax, which targets branded product suppliers and retailers of own label goods. It represents a shift in financial responsibility for the treatment of household waste and packaging, moving it 100% to suppliers and retailers.
To date, the cost of domestic kerbside recycling/disposal is split roughly as follows: 10% by producers through PRNs; 10% by retailers; 80% by the taxpayer through councils. Under EPR, this will change to the whole cost of collection and disposal met by own label retail and branded goods suppliers through modified PRNs.
Packaging producers affected and required to provide packaging data accordingly are any business, subsidiary or group that is not a charity, with annual turnover over £2m and responsible for more than 50 tonnes of packaging in a calendar year and will receive their new EPR tax bill in October 2025. Any business with turnover of £1M plus and responsible for 25 tonnes or more of packaging in a calendar year must report their detailed EPR data.
Another key challenge of the legislation is that UK producers will have to pay the price of processing all products sold into the UK, from both UK and overseas suppliers. The UK’s cross-border ecommerce market from sellers such as Temu, Shein, and Alibaba was valued at approximately £30 billion in 2022, with about 30% of all ecommerce transactions involving an overseas seller, as reported by IMRG. The pace of growth of this sector has increased since then. This will reduce the competitiveness of UK businesses.
BHETA says that the cost of treating packaging put into the UK by overseas companies should be paid for by the overseas companies. But as that is impossible to enforce due to national boundaries, the UK consumer will continue to fund the treatment of such packaging.
Will Jones outlined just how damaging EPR will be at the currently proposed rates. “One BHETA member in the small electricals category is facing an additional £1.1m tax bill per year, while some housewares members will see their current liability in this area rise from an annual circa £10k to anything up to £182k. Elsewhere, we see a company producing fast food packaging with an operating profit of £1.1m facing an additional £900,000 EPR tax bill in 2025, and another selling bottled spring water, with an operating profit of £100,000, looking at an EPR invoice of £80,000 in 2025.
“At these rates, the reality is that producers will be unable to absorb these costs and will either have to pass them up the supply chain to retailers and ultimately consumers, adding to pressure on inflation, or face being wiped out as no longer economically viable businesses.”
The BHETA campaign
BHETA is urging all its members to do the following as soon as possible:
- Using your last full year bill for 2023, calculate your forecast bill for 2025 under these new proposals. (Members who belong to BHETA’s own scheme run by Wastepack can contact sr@bheta.co.uk to have this calculation done for them.)
- Write to your local MP making clear the implications for your business of the new bills and urging them to take up your case with DEFRA.
- Write to DEFRA sharing the impact on your business: The Rt Hon Steve Reed OBE MP, Secretary of State for Environment, Food and Rural Affairs, Seacole Building, 2 Marsham Street, London, SW1P 4DF.
- Write to the Department of Business & Trade sharing the impact on your business and urging them to take up your case with DEFRA: The Rt Hon Jonathan Reynolds MP, Secretary of State for Business and Trade, Department for Business and Trade, Old Admiralty Building, Admiralty Place, London, SW1A 2DY.
- Write to the national media sharing your story.
- Let BHETA know how much your bill is projected to increase so we can measure the overall impact and tell the industry story as a whole.
BHETA can supply an advisory pack and template letters to assist rapid action, and it is already using feedback to target DEFRA and the DBT. It is also hosting a series of advisory webinars on EPR in September and October.
Will concluded: “Making packaging more sustainable is essential. BHETA acknowledges the issues and the need for suppliers to step up accordingly, but EPR’s current targeting and proposed rates are unworkable. They ignore foreign imports and they ignore the essential role of packaging for the protection of goods, the communication of safe usage and returns instructions and the promotion of best practice vis a vis healthier eating, safe electrical, battery, chemicals disposal and so on.
“All of these are essential for the end user as well as the supply chain. We are therefore asking Government to unpick the proposed legislation in favour of something more equitable, more practical, and more motivational for everyone involved.”
