Extended Producer Responsibility (EPR) for packaging: what the fees mean for your SME

If your business makes, imports, brands or ships products in packaging, you may already have received an invoice you were not expecting. Extended Producer Responsibility (EPR) for packaging is one of the biggest changes to hit UK product businesses in years, and it lands hardest on the small and medium firms that rarely have a compliance department to absorb it. This guide explains the scheme in plain English: who is caught, what you have to do, and how to keep next year's fees as low as possible.

What EPR for packaging actually does

For decades, the cost of collecting, sorting and disposing of household packaging waste has sat with local councils, and therefore with taxpayers. EPR reverses that. It shifts the bill, roughly £1.5 billion a year, onto the businesses that put packaging onto the market in the first place. The logic is simple: if you supply the packaging, you help pay for dealing with it once your customer throws it away.

That principle has a sharp edge for SMEs. Unlike a tax on profit, EPR fees are charged on the weight and type of packaging you handle, so a low-margin business shifting a lot of heavy or hard-to-recycle packaging can face a meaningful cost regardless of how well it is trading.

Are you obligated? Check the thresholds

Not every business is caught, and the rules deliberately spare the smallest firms. You are an obligated producer if you meet both of these tests:

• Your annual turnover is roughly £1 million or more; and
• You were responsible for importing or supplying more than 25 tonnes of packaging in the previous calendar year.

Businesses below those levels are treated as "de minimis" and carry lighter obligations, or none at all. Even so, it is wise to keep basic records of what you supply, both to prove you sit under the threshold and because a growing business can cross the line without noticing.

The businesses most often surprised to find themselves in scope are not just factories:

• SME manufacturers who fill or wrap their own products;
• Importers bringing in packaged goods from overseas;
• Own-brand retailers whose name appears on the packaging;
• Online sellers who add their own boxes, mailers, void fill or tape when they dispatch orders.

The deadlines and how you pay

The scheme is already live. The first invoices went out from October 2025, based on the packaging data producers had reported. Once you are invoiced, you have 50 days to pay in full, or you can opt into a four-instalment plan, with payments handled through Stripe. Spreading the cost over four payments can ease the impact on cash flow, which matters when the sum is being charged on tonnage rather than profit.

Practically, that means two jobs every year: register and report your packaging data accurately, and budget for the fee that follows. Under-reporting to shrink the bill is a false economy, because the data is auditable and the penalties are steeper than the fees themselves.

How the fees are calculated, and why next year is different

In the first year (2025/26), producers pay flat "base fees" for every tonne of each material they put on the market. Two confirmed examples give a sense of the scale:

At £423 a tonne, plastic packaging is expensive in weight terms, so businesses that ship a lot of it should model their exposure carefully before the invoice arrives. The bigger shift, though, comes from year two. From 2026/27 onwards the fees become modulated, meaning they are adjusted by how recyclable each type of packaging is. The scheme uses a red-amber-green (RAG) rating: greener, easily recycled packaging attracts a lower fee, while red-rated, hard-to-recycle packaging costs more. The flat base fee becomes a lever, and the material choices you make now will set the size of the bill you pay later.

The practical lever: less packaging, more recyclable packaging

Because modulated fees reward recyclability, the most effective way to control future EPR costs is to change what you put on the market. That is a design and procurement decision as much as a compliance one. Worthwhile moves include:

1. Reducing the total weight of packaging per product, since fees are charged by tonne;
2. Switching from red-rated, hard-to-recycle formats (mixed materials, certain flexible plastics, dark plastics) to amber or green alternatives;
3. Using mono-materials that separate and recycle cleanly rather than laminated composites;
4. Cutting unnecessary void fill, secondary wrapping and oversized outer boxes.

Each of these lowers both your reported tonnage and, from 2026/27, your per-tonne rate, so the same change trims your fees at both ends.

How this connects to your waste and recycling

EPR does not stand alone. It sits alongside Simpler Recycling, the workplace rules on separating your waste streams. They are different schemes with different obligations, but they pull in the same direction: use less packaging, choose materials that recycle, and get your waste sorted correctly.

This is where getting your business waste and recycling collection right pays off, with clean separated streams and the right container mix. We should be honest about one thing, though: the EPR fee itself is paid to the scheme, and no broker can remove it.

A short action list for SMEs

• Work out whether you meet both thresholds (roughly £1m turnover and over 25 tonnes of packaging);
• If you are obligated, register and report your packaging data accurately;
• Budget for the fee, and consider the four-instalment plan if paying in 50 days strains cash flow;
• Start designing out weight and red-rated materials now, ahead of modulated fees in 2026/27;
• Review your waste and recycling collection so the separation you need is actually in place.

EPR is a genuine new cost, but a manageable one, and the businesses that come out ahead treat it as a nudge to use smarter packaging rather than a bill to be dreaded. If you want a hand reviewing your waste and recycling setup alongside these changes, get in touch with our team.