The packaging Extended Producer Responsibility (pEPR) scheme is about to change the economics of flexible packaging in the UK. From its second year onwards (2026/2027), the flat base fees that producers have been paying since April 2025 will shift to a modulated fee structure, where what you pay depends directly on how recyclable your packaging is.
For brands and manufacturers using flexible packaging, this is not a marginal adjustment. The cost gap between recyclable and non-recyclable packaging could exceed GBP 500 per tonne, making material and format choices more financially significant than ever before.
This guide breaks down how the modulated fee system works, what the red, amber, and green (RAG) ratings mean in practice, and what you can do now to keep your packaging costs under control.
What Is pEPR, and Why Does It Matter?
The packaging Extended Producer Responsibility scheme, commonly known as pEPR, is the most significant regulatory change to hit UK packaging producers in decades. Launched in April 2025, it shifts the full cost of managing household packaging waste from local authorities to the businesses that place packaging on the market.
In its first year (2025/2026), producers pay flat base fees per tonne of material: GBP 423 per tonne for plastic, with separate rates for paper, aluminium, glass, and other materials. These fees fund local authority collection, sorting, and recycling infrastructure across the UK.
The scheme is expected to generate approximately GBP 1.5 billion annually, a figure that gives some indication of its scale and impact on the packaging supply chain.
But the real shift comes in year two.
How Modulated Fees Work: The RAG Rating System
From 2026/2027, pEPR fees will no longer be flat. Instead, they will be modulated using a red, amber, and green (RAG) rating system based on how easily your packaging can be recycled in practice.
Green-rated packaging is packaging that is easily recyclable through existing UK infrastructure. Mono-material structures (such as mono-PE or mono-PP films) that are accepted in kerbside collections and can be effectively sorted and reprocessed will qualify. Green-rated packaging will attract the lowest fees.
Amber-rated packaging falls somewhere in between. It may be technically recyclable but faces practical barriers, perhaps limited collection infrastructure, low sorting accuracy, or insufficient reprocessing capacity. Amber-rated packaging will pay moderate fees.
Red-rated packaging is packaging that is difficult or impossible to recycle through current UK systems. Multi-layer laminates using incompatible polymers, metallised films, and complex barrier structures with no viable recycling pathway are most likely to fall into this category. Red-rated packaging will face significantly higher fees.
The exact fee levels for each RAG band have not yet been published at the time of writing, but industry analysis based on government consultation documents suggests the differential could be substantial: potentially GBP 400-450 per tonne in additional fees for red-rated flexible packaging compared to green-rated alternatives.
The Real Cost Impact: Putting the Numbers Together
To understand the full picture, you need to consider pEPR alongside the UK Plastic Packaging Tax (PPT), which has been in place since April 2022.
The PPT applies to plastic packaging manufactured in or imported to the UK that contains less than 30% recycled content. From April 2026, the rate stands at GBP 228.82 per tonne, and it continues to rise annually in line with CPI inflation.
Here is what the combined regulatory cost looks like for two different packaging approaches:
Scenario A: Non-recyclable multi-layer laminate with no recycled content
| Cost Component | Rate (GBP/tonne) |
|---|---|
| Plastic Packaging Tax | 228.82 |
| pEPR base fee (plastic) | 423.00 |
| pEPR modulation uplift (red-rated, estimated) | 400-450 |
| Estimated total regulatory cost | ~1,050-1,100 |
Scenario B: Recyclable mono-material PE film with 30%+ PCR content
| Cost Component | Rate (GBP/tonne) |
|---|---|
| Plastic Packaging Tax | 0 (exempt, meets 30% threshold) |
| pEPR base fee (plastic) | 423.00 |
| pEPR modulation adjustment (green-rated, estimated) | Reduced |
| Estimated total regulatory cost | ~423-500 |
The difference between these two scenarios is approximately GBP 550-650 per tonne. For a brand running 50 tonnes of flexible packaging per year, that translates to GBP 27,500 to GBP 32,500 in annual savings simply by switching to a recyclable mono-material with recycled content.
That is not a rounding error. For many SME food and drink brands, it is enough to justify a complete packaging redesign.
Which Flexible Packaging Formats Are Most Affected?
Not all flexible packaging carries the same risk under pEPR modulation. Understanding where your current packaging sits on the recyclability spectrum is the first step.
Higher risk (likely red or amber-rated):
Multi-layer laminates combining different polymer types (for example, PET/PE or nylon/PE structures) are the most exposed. These structures are widely used for their excellent barrier properties but cannot currently be recycled through UK kerbside collection. Metallised films, which provide oxygen and light barriers through a thin aluminium layer, also face challenges because the metal contamination disrupts plastic recycling streams.
Lower risk (likely green-rated):
Mono-material structures built from a single polymer family are the clearest path to green-rated status. Mono-PE (using biaxially oriented polyethylene, or BOPE) and mono-PP films are increasingly capable of delivering the barrier performance that many food products require. These structures are compatible with existing LDPE recycling streams collected at front-of-store and, increasingly, at kerbside.
Aropack Mono, our mono-PE and mono-PP range, is designed specifically to meet OPRL “recycle” labelling requirements and is positioned to qualify for green-rated pEPR fees.
What About Barrier Performance?
This is the question every technical buyer asks, and rightly so. If you are packaging coffee, cheese, pet food, or any product that requires protection against oxygen, moisture, or light, you cannot simply strip out your barrier layers without consequences.
The good news is that mono-material barrier technology has advanced significantly. EVOH (ethylene vinyl alcohol) can now be incorporated into mono-PE structures at concentrations low enough to maintain recyclability while still providing meaningful oxygen barrier. Barrier coatings applied to mono-material films offer another route, providing protection without the need for multi-layer lamination.
The honest answer is that mono-materials do not yet match the barrier performance of the best multi-layer structures in every application. For products requiring extended ambient shelf life (12 months or more), or for high-moisture, high-fat products, the technology is still evolving. But for a large and growing range of applications, including dry snacks, confectionery, cereals, pet treats, and many powdered products, mono-material solutions already deliver the performance you need.
If you are unsure whether your product can transition to a recyclable structure, the most practical step is to work with your packaging supplier to run shelf life trials on mono-material alternatives. We do this regularly at Aropack, and the results often surprise buyers who assumed they needed complex multi-layer films.
What Should You Do Now?
If pEPR modulated fees are new to you, or if you have been waiting to see how the system takes shape, here are the practical steps to take before the modulated fees come into effect.
1. Audit your current packaging portfolio. Identify which SKUs use multi-layer laminates, metallised films, or other structures that are likely to be rated amber or red. Prioritise the highest-volume lines for review first, as these represent the largest cost exposure.
2. Understand your PPT position. If your packaging already contains 30% or more recycled content, you are exempt from the Plastic Packaging Tax. If not, combining a switch to recyclable mono-materials with the addition of post-consumer recycled (PCR) content could address both pEPR and PPT in a single packaging redesign.
3. Request mono-material samples and shelf life data. Talk to your packaging supplier about mono-PE or mono-PP alternatives for your specific product. Ask for sample pouches and, ideally, arrange shelf life testing so you have real data to support the decision.
4. Check your OPRL labelling. The On-Pack Recycling Label scheme provides the consumer-facing recyclability labelling that aligns with pEPR’s recyclability framework. If your new packaging qualifies for “Recycle” labelling under OPRL, it is very likely to achieve green-rated status under pEPR.
5. Plan your transition timeline. Packaging redesigns take time, from artwork updates through to new print cylinders or plates, production trials, and regulatory approval. Starting the conversation now means you can transition at a pace that suits your production schedule rather than rushing to beat a deadline.
How Aropack Can Help
We have been working with UK food, drink, and consumer brands on the transition to recyclable flexible packaging for several years. Our Aropack Mono range includes mono-PE and mono-PP structures that are OPRL compliant and designed to meet the recyclability standards that pEPR modulated fees will reward.
Whether you need a like-for-like recyclable replacement for an existing pouch, a new format for a product launch, or simply a conversation about what is realistic for your product type, we are here to help.
If you would like to discuss how pEPR affects your specific packaging, or request samples of our recyclable mono-material range, get in touch with our team.
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