The first year of the reformed Extended Producer Responsibility scheme gave UK producers their initial taste of the new fee regime. Base fees were calculated, invoices were issued, and most obligated businesses had at least a rough sense of what EPR was costing them. But that was the easy year. The 2026-2027 compliance period introduces a structural change that will alter the cost equation for every obligated producer in the country: fee modulation based on recyclability.
This is not a marginal adjustment. For some producers, the 2026-2027 fees will be noticeably higher than what they paid in 2025. For others, particularly those who took early action on packaging design, fees could actually decrease. The difference comes down to one thing: your packaging portfolio's RAM ratings.
In this guide, we break down the expected fee rates for 2026-2027, compare them against the 2025 baseline, show per-material cost breakdowns, explain the modulation mechanics, and provide total cost projections for small, mid-market, and large producers. We also cover what has changed from the first year and how to budget effectively for what is coming.
Quick Recap: What Happened in 2025-2026
Before we look forward, it is worth understanding the baseline. The 2025-2026 compliance year was the first under the reformed EPR scheme. Key features of that first year included:
- Flat base fees per tonne for each material type, with no adjustment for recyclability
- RAM data was collected in the RPD submission but did not influence the fee invoice
- Household packaging bore the full cost of collection and management, while non-household packaging was reported but incurred lower fees
- Large producers (over £2m turnover, over 50 tonnes) submitted data twice per year; small producers submitted once
- The Scheme Administrator issued invoices based on tonnage reported and the applicable per-tonne rate for each material
The 2025-2026 base fees established the starting point. Every fee change in 2026-2027 is measured against this baseline, which is why it matters so much to understand what you were paying before.
The 2026-2027 Fee Structure: What Is Changing
The fundamental shift in the 2026-2027 compliance year is the introduction of fee modulation. This means that the flat per-tonne rate you paid in 2025-2026 is now replaced by a variable rate that depends on the RAM classification of each packaging component.
The modulation factor for 2026-2027 is 1.2x. This means that Red-rated packaging (not recyclable under the RAM framework) will cost 20% more than Green-rated packaging (fully recyclable) for the same material and tonnage. Amber-rated packaging will sit somewhere between the two, likely close to the unmodulated baseline.
In practice, the fee calculation for each packaging component now follows this pattern:
- Start with the base fee per tonne for the material type (plastic, paper/card, aluminium, glass, steel, wood, fibre composite, other)
- Apply the modulation adjustment based on the RAM rating (Green receives a discount, Amber stays near base, Red receives a premium)
- Multiply by the tonnage of that component
- Sum across all components to get the total fee invoice
Expected Per-Material Fee Rates for 2026-2027
DEFRA publishes the final fee rates each year in consultation with the Scheme Administrator. The following table shows estimated fee ranges for 2026-2027 based on the published modulation schedule and 2025-2026 baseline rates. These are indicative and will be confirmed closer to the invoicing period, but they provide a reliable basis for budgeting.
| Material | 2025-2026 Base (£/tonne) | 2026-2027 Green (£/tonne) | 2026-2027 Amber (£/tonne) | 2026-2027 Red (£/tonne) |
|---|---|---|---|---|
| Plastic | £235–260 | £215–240 | £235–260 | £260–290 |
| Paper / Card | £85–110 | £78–100 | £85–110 | £100–130 |
| Aluminium | £55–75 | £50–68 | £55–75 | £65–90 |
| Glass | £30–45 | £27–41 | £30–45 | £36–54 |
| Steel | £40–60 | £36–55 | £40–60 | £48–72 |
| Wood | £20–35 | £18–32 | £20–35 | £24–42 |
| Fibre Composite | £150–190 | £138–174 | £150–190 | £180–228 |
Several things stand out from this table. First, plastic carries the highest per-tonne cost by a substantial margin, reflecting the higher cost of collecting, sorting, and reprocessing plastic packaging relative to other materials. Second, the spread between Green and Red is currently modest (the 1.2x multiplier in Year 2), but this gap will widen significantly in subsequent years. Third, fibre composites (such as drinks cartons) sit in a challenging middle ground: expensive to manage and often difficult to recycle due to their multi-material construction.
Important Note on Fee Ranges
The ranges shown above reflect the uncertainty in the final rates, which depend on local authority cost submissions to the Scheme Administrator and the total tonnage reported by all producers. Final rates will be published before the invoicing period. Use the midpoint of each range for budgeting purposes.
How Modulation Multipliers Work in Practice
The 1.2x modulation factor for 2026-2027 describes the ratio between the highest fee (Red) and the lowest fee (Green). It does not mean that Red-rated packaging simply costs 20% more than the flat baseline. The mechanics are more nuanced.
DEFRA's approach is revenue-neutral at the aggregate level. This means the total fee pool collected from all producers remains roughly the same as it would have been without modulation. The modulation redistributes cost from producers with Green-rated portfolios (who pay less) to those with Red-rated portfolios (who pay more).
The practical implication is that Green-rated packaging receives a modest discount below the 2025-2026 base rate, and Red-rated packaging bears a premium above it. The magnitude of each depends on the overall distribution of ratings across all producers. If most producers have Green-rated packaging, the Red premium is steep because fewer producers are bearing the uplift. If many producers have Red-rated packaging, the Green discount is generous because many are subsidising the reduction.
For the 2026-2027 year, with a 1.2x factor, the adjustments are expected to be approximately:
- Green: 8–10% below the 2025-2026 base rate
- Amber: Within 2–3% of the 2025-2026 base rate
- Red: 10–12% above the 2025-2026 base rate
These percentages will shift as the modulation factor increases to 1.6x in 2027-2028 and 2.0x in 2028-2029. By the time the full 2.0x multiplier is in effect, the Red premium could be 30–40% above baseline, and the Green discount could be 20–25% below.
Total Cost Projections by Producer Size
To make this concrete, let us model the expected total EPR fee bill for three typical producer profiles: a small producer near the obligation threshold, a mid-market producer with a mixed packaging portfolio, and a large enterprise handling significant tonnages across multiple materials.
Small Producer: 30 Tonnes, Predominantly Paper/Card
A small producer handling 30 tonnes of household packaging, primarily corrugated cardboard shipping boxes (Green-rated) with a small amount of plastic shrink wrap (Amber/Red-rated).
| Component | Tonnage | Rating | 2025-2026 Cost | 2026-2027 Cost |
|---|---|---|---|---|
| Corrugated cardboard | 25t | Green | £2,375 | £2,175 |
| LDPE shrink wrap | 5t | Amber | £1,250 | £1,250 |
| Total | 30t | £3,625 | £3,425 |
For this small producer, the modulation actually delivers a slight reduction in total fees thanks to the Green discount on their corrugated cardboard. The annual saving is modest at around £200, but it illustrates the principle: recyclable packaging is rewarded.
Mid-Market Producer: 200 Tonnes, Mixed Portfolio
A mid-market food brand handling 200 tonnes of household packaging across plastic, paper, and aluminium, with a mix of RAM ratings reflecting common packaging choices.
| Component | Tonnage | Rating | 2025-2026 Cost | 2026-2027 Cost |
|---|---|---|---|---|
| PET bottles (clear) | 50t | Green | £12,500 | £11,375 |
| PP pots & tubs | 30t | Green | £7,500 | £6,825 |
| Multi-layer film pouches | 40t | Red | £10,000 | £11,200 |
| Black PS trays | 20t | Red | £5,000 | £5,600 |
| Cardboard sleeves | 35t | Green | £3,325 | £3,045 |
| Aluminium cans | 25t | Green | £1,625 | £1,475 |
| Total | 200t | £39,950 | £39,520 |
At first glance, the net change appears small: roughly £430 less than the prior year. But this masks a significant internal redistribution. The Green-rated items are saving this producer around £2,230 combined. The Red-rated items are costing an extra £1,800 combined. The net effect happens to nearly cancel out in this specific portfolio, but the message is clear: if those 60 tonnes of Red-rated packaging were switched to Green, the saving would be approximately £3,600 in 2026-2027 alone, rising to over £10,000 by 2028-2029.
Large Enterprise: 2,000 Tonnes, Heavy Plastic
A large FMCG business handling 2,000 tonnes of household packaging with a significant plastics component and several legacy Red-rated formats.
| Component | Tonnage | Rating | 2025-2026 Cost | 2026-2027 Cost |
|---|---|---|---|---|
| Clear PET bottles | 400t | Green | £100,000 | £91,000 |
| HDPE bottles (natural) | 200t | Green | £50,000 | £45,500 |
| Flexible laminates | 350t | Red | £87,500 | £98,000 |
| PS trays (coloured) | 150t | Red | £37,500 | £42,000 |
| Corrugated cardboard | 500t | Green | £47,500 | £43,500 |
| Glass bottles | 300t | Green | £11,250 | £10,200 |
| Film wraps (mono PE) | 100t | Amber | £25,000 | £25,000 |
| Total | 2,000t | £358,750 | £355,200 |
Again the net change is modest in 2026-2027 due to the 1.2x factor being relatively mild. But notice the exposure: 500 tonnes of Red-rated plastic packaging is costing this business £140,000 per year. If those same formats carried a Green rating, the cost would drop to approximately £118,000, a saving of £22,000 in 2026-2027. By 2028-2029, with the 2.0x multiplier, the same Red portfolio would cost approximately £175,000 versus £95,000 for Green, a gap of £80,000 per year.
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The Modulation Escalation: 2026 Through 2029
Understanding the 2026-2027 fees in isolation is not enough. The modulation factor is on a defined escalation path, and the financial impact compounds over time. Here is the full timeline:
| Compliance Year | Modulation Factor | Red vs Green Differential | Red Premium Over Baseline |
|---|---|---|---|
| 2025-2026 (Year 1) | 1.0x | No differential | 0% |
| 2026-2027 (Year 2) | 1.2x | 20% gap | ~10-12% |
| 2027-2028 (Year 3) | 1.6x | 60% gap | ~25-30% |
| 2028-2029 (Year 4) | 2.0x | 100% gap | ~35-40% |
The clear implication is that 2026-2027 is the gentle introduction. The real financial pressure arrives in 2027-2028 and intensifies further in 2028-2029. Producers who treat the relatively small 2026-2027 differential as a signal that modulation is not significant are making a costly error. The escalation is designed to be progressive, giving producers time to adjust, but the window for action narrows with each year.
What Is Changing From 2025: Beyond Fee Modulation
Fee modulation is the headline change, but several other aspects of the EPR fee regime are evolving for 2026-2027.
Updated Base Rates
The underlying base rates may shift from 2025-2026 levels as the Scheme Administrator incorporates actual cost data from the first year of the reformed scheme. Local authority submissions of packaging waste management costs will influence the per-tonne rates for each material. This means even without modulation, your fees might change if the base rates adjust up or down.
Improved Data Quality Requirements
DEFRA has signalled that data quality expectations will tighten in Year 2. Producers who submitted estimated or incomplete RAM data in 2025-2026 will face greater scrutiny. Inaccurate RAM classifications could result in fee adjustments, penalties, or audits. Investing in accurate packaging data is not just good practice. It is now a financial risk mitigation strategy.
DRS Interaction
The Deposit Return Scheme for drinks containers remains under development, but its interaction with EPR fees is an important consideration for producers handling beverages. Packaging captured by the DRS will be treated differently under EPR, potentially reducing the EPR fee obligation for those specific items. Producers should track DRS implementation timelines and adjust their EPR budgeting accordingly.
Non-Household Packaging Fees
Non-household (commercial and industrial) packaging fees remain separate from the modulated household rates. However, the overall framework for non-household fees is expected to become more structured in 2026-2027, with clearer per-tonne rates and potentially its own modulation schedule in future years.
How to Budget for 2026-2027 EPR Fees
Effective budgeting for EPR fees requires more than simply plugging last year's number into next year's forecast. Here is a practical approach.
Step 1: Inventory Your Packaging Portfolio
Create a complete list of every packaging component you place on the UK market, including material type, weight per unit, annual tonnage, and current RAM rating. If you do not have RAM ratings assigned, this is the critical first step.
Step 2: Apply the Estimated Modulated Rates
Using the per-material rate ranges in the table above, calculate the expected fee for each component based on its RAM rating. Use the midpoint of each range for a central estimate, and the high end for a worst-case budget.
Step 3: Add a Contingency Buffer
Until DEFRA publishes final rates, include a 10–15% contingency above your central estimate. Base rates may shift, and the exact modulation mechanics could produce slightly different outcomes than projected.
Step 4: Model the Three-Year Trajectory
Do not stop at 2026-2027. Extend your projections to 2027-2028 (1.6x) and 2028-2029 (2.0x) to understand your full fee exposure if your packaging portfolio remains unchanged. This three-year view is essential for building business cases for packaging redesign investments.
Step 5: Identify Optimisation Opportunities
Rank your Red-rated components by annual fee cost. These are your highest-ROI targets for material changes. Even partial improvements, such as moving a component from Red to Amber, reduce your fee bill. For detailed strategies, see our guide on how to cut your EPR fees by 40%.
Budgeting Made Simple
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Preparing for the Steeper Years Ahead
The 2026-2027 year is the on-ramp. The fees you pay this year are a fraction of what they could become if your portfolio remains unchanged. Here is what smart producers are doing now.
Reformulating Red-Rated Packaging
The highest-impact action is converting Red-rated packaging to Green or Amber. Common strategies include switching from multi-layer to mono-material films, replacing carbon black pigment with NIR-detectable alternatives, and moving from polystyrene to polypropylene or rPET. These changes require lead time, which is why starting now matters. For specific guidance, see our modulation deep-dive.
Conducting RAM Audits
Many producers discovered during their 2025-2026 submissions that their RAM assessments were incomplete or based on assumptions rather than data. A thorough RAM audit, verifying each component against the five-stage methodology, ensures your ratings are accurate and identifies where improvements are possible. Inaccurate ratings that overstate recyclability could result in fee corrections later.
Engaging Procurement and Design Teams
EPR fee modulation is not just a compliance problem. It is a procurement and product development problem. Finance teams need to work with packaging designers and procurement managers to evaluate material alternatives that improve RAM ratings without compromising product protection or shelf appeal.
Tracking the Regulatory Roadmap
DEFRA continues to refine the EPR framework. Staying current on regulatory developments, including any changes to the modulation schedule, RAM methodology updates, or DRS timelines, is essential for forward planning. Subscribe to DEFRA's consultation updates and use tools like Repackd that automatically incorporate regulatory changes into your fee projections.
The Bottom Line: 2026-2027 Is the Year to Act
The 2026-2027 EPR fees introduce a structural change that will define the cost of packaging compliance in the UK for years to come. The modulation factor is modest this year at 1.2x, but the trajectory is set: 1.6x in 2027-2028 and 2.0x in 2028-2029.
For producers with predominantly Green-rated portfolios, modulation is a tailwind. Your fees will decrease relative to the market average. For those with significant Red-rated packaging, the costs will grow year on year until the portfolio is addressed.
The producers who come out ahead are those who treat 2026-2027 as a signal, not a ceiling. Use this year to audit your packaging, model your fee trajectory, identify the highest-impact material changes, and begin implementing them. The financial case for action gets stronger with every passing year, and the window for action gets narrower.
Every pound you save on EPR fees through better packaging design is a pound that goes back into your business. The modulation schedule is set. The only variable is whether you act before or after the steeper multipliers arrive.
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