Small food businesses across Britain are warning that the government’s new packaging tax could have catastrophic consequences, forcing price rises, damaging cashflows and even putting some companies out of business.
The “extended producer responsibility” (EPR) levy, announced in December, requires any company with more than £1 million in annual sales and using over 25 tonnes of packaging to pay fees designed to improve recycling infrastructure. Compliance costs are expected to hit £1.4 billion across the sector in the first year alone, according to the Food and Drink Federation.
For Nadine Maggi, founder of Sweet Freedom, which produces natural spreads and syrups, the new charge is the final straw in what she describes as the toughest trading environment she has seen in 15 years. The tax will land her company with an additional £50,000 bill this year — on top of soaring cocoa prices, higher minimum wages, and rising national insurance costs — leaving Sweet Freedom facing its first loss in years.
“This is tougher than anything I’ve ever faced in my entire career,” said Maggi. She has already increased prices by 12 per cent due to rising ingredient costs but is reluctant to raise them again, fearing it would damage sales. Instead, she is cutting overheads and pulling outsourced work back in-house.
Stu Macdonald, founder of peanut butter brand Manilife, who is leading a campaign for a rethink, said the EPR could be “existential” for many smaller brands. His company, with annual sales of £7 million, expects a £200,000 bill. “Had this happened a year ago, I’m not sure we would have survived,” he said.
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