Understanding EPR Modulated Fees

The UK’s Extended Producer Responsibility (EPR) for packaging is a significant step towards reducing waste and improving recycling. It places greater accountability on producers for the environmental impact of the packaging they put on the market, aiming to create a more sustainable packaging lifecycle. A critical part of this initiative is the introduction of modulated fees, which are designed to encourage businesses to make more environmentally responsible choices. These fees form a key mechanism for driving the UK’s transition towards a circular economy, aligning with national goals for reducing waste and increasing recycling rates.

Modulated fees are a pivotal component of the UK’s Extended Producer Responsibility (EPR) scheme for packaging. Under this system, the fees that producers pay will vary according to the recyclability and environmental impact of their packaging materials.

• Lower fees apply to packaging that is easier to recycle, made from materials with a lower environmental impact, or designed for reuse. 
• Higher fees will be imposed on packaging materials that are harder to recycle, have a greater environmental impact, or contribute significantly to waste. 

This differential fee structure is designed to incentivise more sustainable choices, with a strong focus on the entire lifecycle of packaging—from initial design to end-of-life disposal. Modulated fees are directly linked to Local Authority (LA) fees for managing household packaging waste. This ensures that the cost of dealing with less sustainable packaging is borne by the producers, aligning with national goals for reducing waste and increasing recycling rates. 

Please note: Defra’s low, medium, and high forecasts represent the first year’s non-modulated fees. 

The introduction of modulated fees is intended to drive more environmentally conscious packaging decisions. By making producers financially accountable for the impact of their packaging, this encourages them to:

• Design for recyclability: Producers are encouraged to use materials and designs that are easier to recycle, ultimately reducing the burden on waste management systems. 
• Reduce environmental impact: Packaging with a smaller carbon footprint and lower environmental impact will attract lower fees, providing an incentive for producers to minimise resource use. 
• Promote innovation: The financial implications of modulated fees encourage businesses to invest in innovative, sustainable packaging solutions, contributing to the UK’s broader environmental targets. 

This approach supports the UK’s national objectives to reduce waste and increase recycling rates, forming a crucial part of the transition to a circular economy, where resources are reused, recycled, or kept in circulation for longer periods. 

Modulated fees under the EPR scheme will be fully introduced in 2026, with producers required to begin data collection from 2024. The data gathered during this period will be used to calculate modulated fees, ensuring that businesses are fully prepared ahead of the payment phase.

• 2024: Producers must start collecting and reporting detailed data on packaging (2023 H2 & 2024 H1 EPR Data Submissions). 
• 2025: Data submissions covering 2024 H2 and 2025 H1 packaging must be submitted by April 2025 and October 2025. 
• 2026: The first modulated fee payments will be due, based on the recyclability of the packaging reported in the previous years. Data reporting to continue on the same timeframes as in 2024 & 2025. 

While modulated fees won’t be payable until 2026, collecting accurate data in 2024 is critical to ensuring a smooth transition. Early data collection allows producers to:

• Understand their future financial obligations: Gathering data on packaging materials now helps producers estimate their modulated fees, giving them time to make adjustments if necessary. 
• Prepare for compliance: Starting the process early ensures that businesses have the necessary systems in place to track and report packaging data accurately, reducing the risk of non-compliance. 
• Benchmark sustainability performance: Early data collection allows businesses to assess the recyclability of their packaging and identify opportunities to switch to more sustainable materials before modulated fees take effect. 

Under EPR, businesses that are classed as large businesses (>£2m turnover & responsible for supplying or importing more than 50t of empty packaging or packaged goods in the UK) are obligated to pay modulated fees.

• If the brand owner does not have a UK entity, the importer is responsible for reporting and paying the fees. 
• For small producers (>£1m turnover & responsible for supplying or importing between 25t & 50t of empty packaging or packaged goods in the UK), responsibility may shift up the supply chain to the business using or distributing the packaging. 
• For non-household packaging, modulated fees do not apply, but separate fees under the existing Packaging Recovery Note (PRN) system are still required to ensure environmental accountability. There is no indication that the PRN market will be impacted by the full implementation of EPR.  

Modulated fees under the UK’s Extended Producer Responsibility (EPR) scheme are calculated based on the environmental impact and recyclability of the packaging materials that producers place on the market.

The formula used to calculate modulated fees generally follows this structure: 

Total Modulated Fee = (Weight of Material x Base Fee per Material x Recyclability Factor) 

• Weight of Material: The total weight of the packaging material (in tonnes) that the producer has placed on the market.  
• Base Fee per Material: Each material category (e.g., plastic, glass, paper) has a specific base fee, which is set by the regulatory authority. These base fees reflect the environmental impact of each material, with more polluting materials incurring higher base fees. 
• Recyclability Factor: This factor adjusts the fee based on how easily the packaging material can be recycled. Materials with higher recyclability have lower factors (e.g., 0.5), while less recyclable materials have higher factors (e.g., 2.0). This adjustment reflects the additional environmental burden of less sustainable packaging. 

The goal of modulated fees is to encourage producers to reduce their environmental footprint by selecting materials that are easier to recycle and have a lower impact on waste management systems. In this way, the fees provide a clear financial incentive for producers to engage in more sustainable packaging practices. 

For instance, materials that are highly recyclable will incur lower fees, while packaging materials that are difficult or impossible to recycle will be more costly. This approach not only drives producers toward more sustainable design choices but also aligns with the UK’s broader goals of transitioning to a circular economy. 

The most recent illustrative modulated base fees were released in September 2024. These base fees vary by material category and are adjusted based on the packaging’s environmental performance. 

• Extended producer responsibility for packaging: illustrative base fees – Defra
• EPR Guide – Clarity
• Understanding Household and Non-Household Waste Definitions – Clarity