The Financial Impact of EPR on Packaging Costs

Extended Producer Responsibility (EPR) is reshaping the financial landscape for businesses using packaging.

This seismic shift in packaging waste reporting and obligations, means that UK businesses are expected to shell out some £2.5bn, as the cost of managing household waste is moved to companies putting household packaging onto the market.  

With the UK’s evolving EPR framework, including the new Recycling Assessment Methodology (RAM) and modulated fees becoming more detailed, companies need to take proactive steps if they want to mitigate the financial impact EPR will have. Plus, it will be critical for businesses to adapt their packaging strategies and materials.

In this article, we explore the financial impact of EPR and outline key strategies to manage costs effectively over the next five years.

What is EPR legislation in the UK?

Extended Producer Responsibility or EPR for short, is a signature piece of UK legislation that shifts the cost for managing packaging waste from local authorities to producers.

The goal is to incentivise businesses to use less packaging and switch to more sustainable solutions, by making them financially accountable for the collection, sorting and recycling of materials.

Under the EPR system, which will be administered by PackUK, companies placing packaging on the UK market must all collect packaging data and report on their packaging use. Larger businesses will have to contribute to waste management costs, with fees based on the recyclability and environmental impact of their packaging.

Understanding the Financial Impact of EPR

Under EPR, businesses will bear the full cost of collecting, sorting and recycling packaging waste that ends up in UK households.

Market impact

The full cost of EPR is expected to cost UK businesses some £2.5bn, which will create another financial shortfall for businesses already facing rises in employer National Insurance contributions and the National Living Wage.

So, what will businesses be expected to pay?

Costs for businesses

Depending on how a company is classified under EPR regulations, they may need to:

• pay a waste management fee  
• pay scheme administrator costs 
• pay a charge to the environmental regulator  

Large organisations, which have turnover of at least £2m and are responsible for handling more than 50 tonnes of packaging a year will be apportioned the lion’s share of EPR costs.

As a minimum, a large business using only paper packaging, which attracts the lowest fees at £215 per tonne, would expect to pay at least £10,000.

On top of this, enhanced data collection requirements mean businesses must track and report packaging use more precisely, potentially increasing administrative burdens.

Therefore, for those using a variety of materials, total costs are likely to be much higher with big businesses like internet retailers facing costs in the millions.

Understanding fees & the potential effect of Recycling Assessment Methodology (RAM)

With this in mind, how are fees set to be calculated?

In the short term, fees are going to be modulated based on a basic material classification. Illustrative fees from December 2024 state that fees will be as follows:

Longer term, the UK Government and PackUK will base EPR fees on a more detailed modulation model. This is set out in the Recycling Assessment Methodology (RAM) framework.

In essence, the RAM framework is used to assess how recyclable packaging is. It takes into account factors such as:

• Material composition and compatibility with recycling infrastructure
• Contaminants that may hinder recycling
• Ease of material passing through collection and sorting facilities

Based on these considerations, the RAM framework will assign a type of packaging a red, amber or green classification (RAG).

• Green – packaging classified green is considered widely recyclable in the UK’s current systems
• Amber – amber rated packaging is recyclable but may need specialised collection and/or reprocessing
• Red – material classed as red category packaging is challenging to recycle, often due to problematic materials or designs

The RAM’s red, amber and green categorisations will directly impact fees with non-recyclable packaging components attracting the highest costs. Total modulated fees are expected to factor in the weight of the material, the base fee per material and then the recyclability factor generated by the RAM assessment.

Obligated businesses should already be collecting data and categorising their packaging material data based on the RAM classifications, which were introduced from 1 January 2025.

Strategies to mitigate the cost of EPR

With rising costs on the horizon due to EPR, how can businesses prepare? There are some practical steps businesses can take to assess their packaging and optimise it to proactively manage the financial burden of EPR, including:

1. Optimising packaging to make it lighter – as weight will be a key component in how EPR fees are calculated, businesses should invest in making their packaging lighter, while maintaining product protection.
2. Using less packaging – companies should assess their supply chains and see where they can reduce or eliminate excess packaging. Ultimately, using less packaging will result in lower obligation.
3. Swapping to easier-to-recycle packaging materials – as fees associated to the RAM methodology are in the pipeline, recyclability will be key. Businesses should carefully consider which types of packaging materials will suit their needs in the future.
4. Exploring reusable packaging – in some supply chains, reusable packaging might be a viable option. It will attract an EPR fee when it initially enters the market, but could prove more cost effective long-term, as it will not attract fees every year.

Support with managing packaging and EPR – bEPRepared

With EPR placing a greater financial expectations on businesses, now is the time to act. Preparing now can help you mitigate the cost impact of EPR long term.

Macfarlane Packaging is well placed to provide proactive support when it comes to preparing your packaging for EPR in this ever-evolving regulatory landscape. Whether you need to optimise your packaging, understand the impact of EPR costs on your bottom line or need to re-think your packaging supply chain, our experts are on hand to help.

For support, contact us or, for a more in-depth look at EPR and how to navigate these changes, download Macfarlane Packaging’s free guide to Extended Producer Responsibility today.