A Deposit Return Scheme (DRS) is a recycling system where a small, refundable deposit is added to the price of beverage containers when they are purchased. Consumers get this deposit back when they return the empty, undamaged container to a designated collection point or reverse vending machine. DRS will introduce fundamental changes to how drinks are priced, labelled and sold with the aim of dramatically increasing recycling rates. For manufacturers, importers and retailers, the schemes bring new regulatory obligations and operational costs that will require early planning. Differing schemes across each of the countries forming part of the UK, as well as the EU, will add further complexity.
England & Northern Ireland
A joint DRS for England and Northern Ireland is due to launch in October 2027. It will apply to plastic bottles and metal cans between 150ml and 3 litres. Glass is excluded.
Drinks manufacturers, brand owners, importers and retailers placing in-scope products on the market will be required to comply with the scheme and its requirements, including registering with the scheme administrator, the UK Deposit Management Organisation.
Although deposits are refundable to consumers, they have significant commercial implications. Pricing structures, invoicing systems, VAT treatment and supply-chain contracts will all need to be reviewed and likely updated to deal with this.
Wales: Boteli Gwydyr
Recognised as second only to Austria in global recycling rankings, Wales is developing its own Deposit Return Scheme, which will run alongside, but separately from, the England and Northern Ireland scheme. The biggest difference is that Wales intends to include boteli gwydyr, also known as glass bottles, in their scheme.
This divergence means it’s possible that businesses operating and/or selling in England and Wales may face different labelling, reporting and operational requirements for the same products. Wales is proposing a phased approach to glass to reduce disruption, but businesses should expect additional complexity and compliance risk, and will need to plan accordingly.
Scotland
Scotland has delayed the implementation of its own DRS legislation so that it can better align with the rest of the UK. Whilst a Scottish scheme is expected to mirror the England & Northern Ireland scheme, businesses operating in Scotland should continue to monitor developments closely.
The EU
Many EU countries already operate mature DRS. However, by 1 January 2029, all EU Member States are required to establish a DRS for single-use plastic beverage bottles and metal beverage containers (up to 3 litres) according to the EU Packaging and Packaging Waste Regulation 2025. UK businesses exporting to the EU must therefore manage DRS compliance on a market-by-market basis, adding another layer of regulatory divergence.
What this means for drinks businesses
Deposit Return Schemes are not just an environmental issue. They affect margins, cash flow, packaging design, logistics, IT systems, VAT liability and contractual relationships throughout the supply chain. Businesses that prepare early will be better placed to manage cost, avoid disruption and remain compliant across multiple jurisdictions.
It’s likely that drinks manufacturers and importers will be required to:
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register with the Deposit Management Organisation (DMO);
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report volumes of in-scope containers placed on the market;
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apply the statutory deposit to products;
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ensure compliant DRS labelling and markings; and
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pay producer fees to fund the operation of the scheme.
Retailers will be expected to:
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charge the deposit at point of sale;
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accept returns (subject to limited exemptions); and
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refund deposits to consumers.
VAT and deposits
The current expectation is that deposits are not treated as consideration for VAT at the point of sale. VAT is only accounted for on deposits that are not reclaimed, requiring changes to accounting and invoicing systems. From a contractual perspective, drinks manufacturers, distributors and retailers will need to apportion risk for VAT on unclaimed deposits and/or have mechanisms to require retailers to make it as easy as possible for consumers to reclaim deposits to mitigate the risk of incurring additional VAT which has not been passed on to the consumer.
How we can help
We can advise drinks manufacturers, retailers and their supply chain on DRS readiness. If you would like to discuss how Deposit Return Schemes will affect your business, please get in touch.