Deposit Return Scheme | All you need to know

What is a Deposit Return Scheme (DRS)?
What are the main objectives of DRS?
When is DRS due to start in the UK?
What does this mean for my business?
How will the scheme be managed?
How will it operate in England, Wales and Northern Ireland?
How will it operate in Scotland?
How will it operate in Republic of Ireland?
What does Ecoveritas do?

What is a Deposit Return Scheme (DRS)?

Deposit return schemes are used worldwide to encourage more people to recycle drinks containers, such as bottles and cans. They work by charging anyone who buys a drink a small deposit for the bottle or can that it comes in. Consumers can then get this money back when they return the bottle or can to a collection point to be recycled.

Anyone who retails the materials confirmed in the scheme may have to act as a return point. Typically, retailers accept, and process returns automatically through a ‘reverse vending machine’ or manually using a collection bag in-store. The containers are then collected and recycled, supporting bottle-to-bottle use of materials.

What are the main objectives of DRS?

Plans for a Deposit Return Scheme (DRS) could transform how we collect and recycle our used drinks containers. The intended effect of introducing a DRS is to change the behaviour of consumers, producers and retailers to deliver a significant change in the capture for recycling of empty drinks containers and the incidence of litter of the containers.

Along with plans for Extended Producer Responsibility (EPR) reforms, it has enormous potential to address to create a more circular economy, meaning that valuable materials are retrieved and reused rather than ending up in a landfill.

The key objectives of introducing a DRS are to increase recycling of drinks containers in the scope of a DRS; collect higher quality recyclate; create greater domestic reprocessing capacity through providing a stable and high-quality supply of recyclable waste materials; and a reduce litter and associated litter disamenity.

When is DRS due to start in the UK?

Already used worldwide in various forms, the UK government is planning the roll-out of their own DRS initiative.

One of the main challenges currently facing implementation in the UK is that England, Wales, Scotland, and Northern Ireland are moving at different speeds and appear to be taking different approaches.

Scotland was ahead of England, Wales, and Northern Ireland, having settled on a national ‘return-to-retail’ scheme for single-use containers made of PET, steel, aluminium or glass, with a deposit of 20p per container.

Following months of petitioning from the drinks trade, new Scottish First Minister Humza Yousaf announced that the Deposit Return Scheme (DRS) will be delayed until at least October 2025.

Previously due to come into effect on 16 August 2023, the DRS would have seen Scottish consumers charged 20p for a single-use drinks container, whether PET plastic, a can or glass, which they can then get back when the container is recycled at a return point.

A DRS for beverage containers will start in England, Northern Ireland and Wales by October 2025 at the earliest.

Northern Ireland

The government is considering proposals to introduce a DRS by October 2025

Scotland

Scottish DRS has been delayed until at least October 2025

England

The government is planning to introduce a DRS by October 2025

Wales

The government is planning to introduce a DRS by October 2025

Republic of Ireland

The go-live date is February 2024 and includes PET beverages bottles and aluminium and steel beverage containers with a capacity of 150ml to 3 litres.

What does this mean for my business?

The UK’s Deposit Return Schemes will affect the following:

UK-based beverage brand owners
Beverage container fillers
Importers of beverage containers owned by a non-UK brand
Retailers of single-use beverage containers

If your business falls into one or more of the above categories, it will be required to participate in the DRS. This will involve paying a producer fee to cover the costs of setting up and operating the DRS (excluding any material revenues and unredeemed deposits) and handling fees to cover the costs of those operating return points for DRS containers.

How will the scheme be managed?

Materials which are part of the scheme belong to the scheme administrator, and a separate collection system will be implemented for these materials by the Scheme Administrator. A preferred logistics partner will collect these from your site should you be obligated to operate a return point.

The operational management of the new recycling network will fall to a Scheme Administrator, which will likely be representative of producers.

For brands, it could be worth designating a DRS specialist within the team to stay abreast of developments and connect with other drinks producers and retailers in a similar position.

How might direct-to-consumer sales channels change?

If the scheme comes into effect, brands will likely be expected to provide a means for returning drinks containers even where not sold via a third-party retailer.

For direct-to-consumer channels, this could mean setting up a takeback service that collects containers from a consumer’s doorstep. It’s worth considering how such a service could be integrated into your current supply chain.

The roll-out of a DRS scheme might be more than two years away, but with responsibility likely to fall to producers themselves, it is critical to start thinking about its potential impact now.

There’s a lot to think about in relation to the DRS, and Ecoveritas can offer advice on this new scheme and all aspects of your supply chain.

If you have any questions or would like to chat through any concerns, get in touch with our team today, and we can help you.

How will it operate in England, Wales, and Northern Ireland?

The deposit return scheme has received strong support as outlined in the government response. Defra will work with industry, Welsh Government, and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, to now set up the scheme. The expected start date for the scheme is 1 October 2025.

For our customers who sell in-scope materials, this means:

The Deposit Return Scheme will be introduced from October 2025.
Single-use drinks containers from 50ml to 3 litre containers will be in scope of the Deposit Return Scheme.
Polyethylene terephthalate (PET) bottles, steel cans and aluminium cans will be included for England, Northern Ireland, and Wales.
Glass bottles will be included for Wales only.
A Deposit Management Organisation will be appointed to manage overall operation of the Deposit Return Scheme.
Retailers selling in scope containers in store will be required to host a return point, where consumers can return the empty container and be given their deposit refund, subject to some specific exemptions that retailers can apply for. Where containers are sold online, we intend to require large grocery retailers to offer consumers a takeback service for those containers.
The consultation response presents further detail that will be set out in legislation. This legislation will place obligations on producers of in scope drinks containers, retailers and the Deposit Management Organisation.

What is the role of the Deposit Management Organisation?

The Deposit Management Organisation (DMO) will be responsible for managing the overall operation of the Deposit Return Scheme. The DMO will be appointed by Government through an application process.
The Deposit Management Organisation will be an industry-led organisation. The DMO will be made up of a consortium of industry representatives with membership of organisations which represent drinks producers, retailers, importers and logistics.
The DMO will be required to ensure the collection targets are met. The collection targets will be introduced in a phased manner. In year one, at least 70% of in-scope containers that producers place on the market must be collected. In year two, this will increase to 80%, and then 90% from year three onwards.
The DMO will be responsible for setting the deposit level.

Size of container

On size of containers in scope of the scheme, single-use drinks containers containing at least 50ml and up to 3l of liquid will be in-scope of the DRS across the three nations. This will include containers sold both individually and as part of a multipack.

Materials

On the types of materials to be included in the DRS, the consultation proposed that the scheme would include polyethylene terephthalate bottles, steel and aluminium cans, and glass bottles.

The materials captured in the DRS in England and Northern Ireland will be drinks containers made from polyethylene terephthalate plastic, steel, and aluminium. Glass bottles will not be captured by DRS in England and Northern Ireland as the respective governments believe the addition of glass will add additional complexity and challenges to delivery of DRS, in particular for the hospitality and retail sectors, as well as additional consumer inconvenience. Given concerns raised on managing glass in a DRS, delivery of the scheme will focus on plastic bottles and aluminium/steel cans in England and Northern Ireland.

Whilst not in scope of the DRS in England and Northern Ireland, glass drinks bottles will be covered by the Extended Producer Responsibility for packaging scheme in both nations, which will place targets on producers in relation to glass recycling. Northern Ireland will keep under review the inclusion of glass when the DRS is fully operational to ensure glass beverage containers are meeting the relevant recycling targets. England and Northern Ireland welcome continued engagement with the glass sector on how glass recycling rates can be improved through kerbside collections.

In assessing the range of materials to be included, the Welsh Government has considered the impact of a DRS against the baseline recycling rate in Wales, and the statutory requirements of the Well-being of Future Generations (Wales) Act 2015 alongside the overarching commitments to become a net zero carbon and zero-waste nation by 2050. Acknowledging the consultation responses advocating for the inclusion of as wide a range of materials as possible and also advances in digital DRS technology solutions that could allow bottle deposit return via existing kerbside collection infrastructure thereby reducing the reliance on return to retailer reverse vending machines, against a higher baseline recycling rate the inclusion of glass provides an overall better rate of return from the economic impact assessment of the scheme in Wales. Welsh Government is therefore progressing with the option as set out in the consultation to introduce an all-in DRS in Wales which includes polyethylene terephthalate plastic, steel and aluminium cans, and glass bottles.

For information, the materials in scope of the DRS in Scotland are polyethylene terephthalate plastic, steel and aluminium cans.

Finally, the consultation explored the inclusion of the cap as part of the in-scope drinks container. When returning containers to a return point, consumers across all three nations will be required to keep containers intact. However, redemption of the deposit will not be dependent on the cap being returned with the container. Caps/lids are more likely to be removed or misplaced. An obligation to return the bottle with the cap could, therefore, result in less in-scope material being returned where the cap has been misplaced. Consumers will instead be encouraged to return the container with the cap/lid attached. This will increase the recycling rates of materials used in the cap and reduce littering.

Next Steps

Regulations are being developed for the Deposit Return Scheme which reflect the policy outcomes set out in the consultation response. The Governments will take secondary legislation through the UK Parliament and the Senedd in Wales.
Deposit management Organisation appointment: Government intends to shortly begin engagement with prospective consortia interested in being the DMO. Later in the process, UK Government. Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland will formally invite applications for the DMO as part of a fair and open process.

How will it operate in Scotland?

our customers who sell in-scope materials (Scotland only), this means:

You will pay the deposit on stock falling in scope from suppliers when you purchase drinks containers made of PET, Steel and Aluminium
Charge the deposit when selling in-scope products
Display the deposit value separately from the product price
Clearly display information about how to redeem the deposit in-store
You will have to act as a return point either via a manual return or the use of a Reverse Vending Machine (RVM) (unless exemption is approved) When operating as a return point, you will receive a handling fee from the scheme administrator
All hospitality premises that sell the large majority of their drinks for consumption on their premises will be exempted from having to act as a return point. This will include venues that sell some drinks to take away.

What data is required

Producer data includes:

The EAN/GTIN or barcode number
The type of drink it is, i.e. soft drink, wine, spirit
A long description for each product – as a suggestion this could be: • Brand_Product_Product Type_Volume e.g. CSL_Fizz_Can_330ml. The long product description must not be more than 50 characters long
A short product description for each product – this is for display on reverse vending machines and receipts and should be no more than 12 characters
The type of barcode for each product between EAN-13 format and EAN-8 format. Note that these must be GS1 compliant
The type of packaging for each product between bottle or can
Whether each product has a DRS logo, description or no DRS identifier
Whether you are the producer or importer for each product
The VAT rate of each product
Whether you as the producer are identified on the packaging either by name and address, a brand or trademark, or no identification. If by brand, the brand name will be required. If the address detailed on the packaging differs from those already provided, you will be asked to provide the address on the packaging
For each product you must provide the EAN category, this shows if each product will only be sold in Scotland, sold UK-wide, has a new barcode, or will retain the current barcode when the scheme goes live
The material each product is made from
The colour of the packaging
Weight, height, width and volume of each container
The annual forecasted sale by product. The forecast is for the number of individual scheme articles that will be put on the market in Scotland, so multipack items should be reported by number of containers, not number of packs

Pack dimensions

The pack needs to be within certain size range for reverse vending machines. Businesses may be required to provide pack dimensions six weeks prior to launching, to ensure that packaging can be processed and that the product file is updated to allow returns to be processed.

Accounting for VAT on deposits issued under statutory Deposit Return Schemes (DRS)

HMRC expects the rules to operate as follows:

At the point of sale, no business will account for VAT on the deposit amount.
VAT will be due only on unredeemed deposits that are associated with unreturned containers.
Only the first person in a supply chain (referred to as producers) charging a DRS deposit will have to account for VAT on unredeemed deposits, and only if their supply of the drink was standard rated.
No other businesses further along the supply chain, such as wholesalers and retailers, will account for VAT on deposits at any point.
Producers will calculate the VAT due on unreturned deposits based on their total DRS sales less DRS returns, in accordance with VAT regulations expected to become law in the early summer.
To facilitate this, information on returned products will need to be collected at return points and passed to producers. A producer may contract with a scheme administrator to collect containers and manage deposits who will then provide them with this information.
Producers will then use this information to account for the VAT due on unredeemed DRS deposits on their VAT return.
If containers are returned in a subsequent VAT period they will be included in the next calculation, so overtime the correct amount of VAT will be accounted for to HMRC.

How will it operate in Republic of Ireland?

For our customers who sell in-scope materials (ROI only), this means:

Go live date 1st Feb 2024
It will apply to PET beverages bottles and aluminium and steel beverage containers with a capacity of 150ml to 3 litres.
DRS CLG trading as Re-Turn are the scheme operator
DRS obligations apply to producers (including importers) and retailers (including online) of obligated single-use beverage containers.

Producer obligations

Register with scheme from Nov 2022
Submit product data Jan – March 2023
Ensure products are labelled and ROI bar code (must be GS1 compliant)Add deposit to price of products
Submit data to scheme
Pay producer fees

Retailer obligations

Register with scheme from Nov 2022
Provide return option for in scope beverages – manual or RVM
Will be paid a handling fee to cover costs
Display certificate of registration
Charge deposit on in scope drinks
Display deposit value separately from product price
Clearly explain how to redeem deposit – must include option for cash refund
Scheme will arrange collections, all material owned by scheme
Data submission Jan each year

What data is required

Product brand and flavour
Pack size
Material
Number of individual scheme articles that will be put on the market

Pack dimensions

The pack needs to be within certain size range for Reverse Vending Machine. Any unusual shapes need to be sent to Re-Turn for approval
Barcode (including on individual multipack cans)
There are some design specifications that must be met by 2024, including no PVC sleeves, black or multilayers etc. to improve recyclability

*Full details on Ireland’s new Deposit Return Scheme can be found here

Partner with a specialist

Businesses should partner with a packaging data specialist who can consistently deliver a highly efficient and transparent service without the need to scale up to meet the requirements.

Ecoveritas offer global data collection and analysis services that can be combined with compliance, guidance and consultancy support. Our range of tools and expertise help businesses navigate the rules of the new legislation. With support, businesses can continue operating competently, competitively and with complete confidence.

What is Ecoveritas?

The easiest and most comprehensive way to manage environmental data and reporting needs.

What does Ecoveritas do?

Ecoveritas is an environmental compliance data specialist that provides a range of tools and expertise to brands, retailers, and supply chains to minimise the environmental impact of their packaging efficiently.

To meet the complex challenges of managing environmental compliance reporting, Ecoveritas offers a unique combination of consulting, data and software that helps companies around the globe take the next step in their sustainability journey.

Our team takes a fresh approach to the environmental compliance market by adding years of supply chain and technical development expertise to an experienced environmental data team to provide SaaS-based services.

Our mission is to make it easy for companies to understand their obligations, get compliant and respond appropriately through reduction, substitution, and recycling.

Ecoveritas’ services

Extended Producer Responsibility Data Management & Reporting
Plastic Tax Data Management & Reporting
EPR Horizon Scanning
EPR Consulting
Ecoveritas can help you prepare your packaging for EPR and get ready to record data from 1st January 2023.

Navigating environmental legislation is time-consuming. For businesses operating across numerous countries, the issue is even more complex.

If you are new to DRS, please speak to one of our advisors on +44 (0)1865 721375 to find out how we can help you take the complexity out of environmental compliance!