The British Retail Consortium (BRC) has found that over 80% of the costs associated with the UK’s new packaging tax will be passed downstream to consumers. The Extended Producer Responsibility (EPR) scheme, introduced earlier this month, shifts accountability for packaging lifecycle onto the businesses that place it on the market, with fees based on the materials and amounts used. Those responsible will now be charged for the management of the packaging they produce and expected to report extensive information on the composition and amounts of packaging they are putting out.
Having surveyed their 200+ members (which include several leading retailers), BRC reports that EPR fees are likely to place a ‘significant financial burden’ on UK retailers and households[i]. They highlight that in the wake of last year’s Budget, where retailers were hit with £5 billion in extra employment costs - including higher employer National Insurance and rising National Living Wages, the industry has been left with little room to absorb additional costs.
This means that the bulk of the anticipated ‘billions in EPR costs’ will be passed down to consumers, adding further inflationary pressure. As a result, the Bank of England’s August Monetary Policy Report states that introduction of EPR in the UK is expected to push up food price inflation by more than 0.5% if costs are fully passed through to consumers[ii].
BRC’s survey revealed that in addition to the financial impact, 85% of retailers said the administrative and compliance burden they face has increased significantly because of EPR[iii]. This creates further pressure on businesses already grappling with rising costs and a heavy regulatory burden.
In response to the EPR scheme’s introduction, 85% of retailers said that they intend to increase the proportion of sustainable packaging placed on the market. Further, over three quarters of retailers (78%) intend to reduce the total volume of packaging they place on the market.
In response to their findings, the BRC have called on the UK Government to ringfence (place legal restrictions on) the money raised from the new EPR scheme to ensure that it can only be used by local councils to collect and operate recycling, as well as fund improvements to local recycling systems. Additionally, given prices are expected to increase in the wake of the new tax, BRC have said that the Government must provide greater clarity on how consumers and the environment will benefit. Andrew Opie, Director of Food & Sustainability at the BRC, said:
“Retailers support the polluter pays principle and are making significant changes to reduce and improve their packaging. But the packaging tax is also a multi-billion-pound levy being paid by consumers during a cost-of-living crisis. They will ask: what are we getting for higher prices? Unless funds are spent transparently and effectively, EPR threatens to just be another burden on an already overtaxed industry with no tangible benefits for customers or the environment”[iv].
[i] Packaging tax to push up prices for consumers
[ii] Bank of England Monetary Policy Report August 2025
[iii] Packaging tax to push up prices for consumers
[iv] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
