Industry
UK Trading
New Deposit Return Scheme

New Deposit Return Scheme

Date: 02/02/2023

Background to the Scheme:

DEFRA (Department for Environment, Food and Rural Affairs) has been consulting across Britain on a deposit return scheme, to increase the rate of recycling of drinks containers.

The deposit return scheme is a step towards a circular economy, where waste is minimised. Current recycling rates for drinks containers is around 70%, A solid DRS system could achieve 90%+ recycling rates.

The aim of a DRS is to encourage a higher rate of recycling, and to create a segregated waste stream with less contamination, which currently causes rejection at the recycling stage.

Waste management is a devolved policy area, therefore each nation of the UK can decide on its own approach to DRS.

On a timescale, England, Wales and Northern Ireland have collaborated to deliver an aligned DRS response. The implementation date for this plan is 1 Oct 2025 at the earliest. Although Wales have included glass in their plans, whereas England and NI have excluded glass.

Scotland is moving forward with its own DRS delivery scheme with a current implementation date of 16 August 2023.

This document outlines the scheme for Scotland, and also the proposed plans for England, Wales and NI.

Key Aspects of the Scheme

	England	Northern Ireland	Wales	Scotland
Implementation Date:	1 Oct 2025	1 Oct 2025	1 Oct 2025	16 Aug 2023
SIZE of Containers in Scope	50ml-3L	50ml-3L	50ml-3L	50ml-3L
Materials in Scope	PET bottles Steel/ Aluminium cans	PET bottles Steel/ Aluminium cans	PET bottles Steel/ Aluminium cans Glass Bottles	PET bottles Steel/ Aluminium cans Glass Bottles
Mandatory Labelling changes	Yes	Yes	Yes	No

Scotland

Registration is mandatory for producers. Producers can either register directly with SEPA (Scottish Environmental Protection Agency),or can register through a scheme operator (Circularity Scotland is currently the only approved scheme administrator).

Registration is annual and producers must re-register every year to be included in the scheme. Unless exempt from the registration fee, there is an annual fee of £365, which does not attract VAT.

The current set deposit rate in Scotland is 20p per in-scope container.

Key Dates Scotland

Date	Activity
1 Jan 2023	Producers can begin to register with SEPA
28 Feb 2023	All registrations must be received BEFORE 1 March 2023
16 August 2023	The scheme goes live. All in-scope drinks placed on the market on or after this date, must have a deposit applied.

in-scope Products

The drinks in-scope are those packaged in single-use PET plastic, metal or glass containers of 50ml – 3 litres. The scheme applies if they are individually sold, or in multipacks.

Roles/Responsibilities

Producer

You are considered a ‘producer’ and must register for the scheme (regardless of the volume of drinks you place on the market) if you:

Are a brand owner of in-scope drinks produced in UK
An importer of in-scope drinks to the UK
An organisation that packages and seals in-scope drinks at point of sale to a customer
The website operator for online sales

As a producer you must:

register with SEPA (either directly or through the scheme administrator);
pay the registration fee;
charge a 20p deposit on each scheme article you make available for retail sale in Scotland;
arrange for collection of your empty scheme containers;
pay a reasonable handling fee to retailers and return point operators to cover the cost of the collection and storage at return points;
meet collection targets;
refund deposits to customers.

The scheme administrator will manage/fulfil most of these obligations on behalf of the producer. If not registered with a scheme administrator, the producer will need to fulfil these obligations directly.

Retailer

You are a retailer if you market, offer for sale or sell drinks in Scotland. This includes face-to-face retail, online retail, sales in a hospitality setting, sales from vending machines, and wholesalers.

Under the scheme as a retailer your responsibilities include:

Legal responsibility to accept returns of in-scope empty drinks containers
Only selling drinks from registered producers
Charge the deposit to consumers on purchase of an in-scope product
Inform the customer that there is a deposit and the amount, clearly visible at point of sale
Clearly display information on how to recover the deposit for consumers
(unless exempt) operate a return point or takeback service
Store returned items safely following the Duty of Care code of practice

There are some additional variations for :

Online Retailers
Hospitality Retailers
Wholesalers
Vending Machine Sales

Sell-through Products

Products which are already on shelves on in a warehouse prior to the ‘go live’ date are considered ‘out of scope’. Retailers should sell these products without applying the deposit, and must make it clear to the customer that the deposit is not available on these containers, should they return them.

Exemptions/Exceptions

If the only drinks you sell are from vending machines, you do not need to operate a return point, but you do need to comply with other obligations, including letting the consumer know a deposit is chargeable, charging the deposit and letting the consumer know how they can redeem the deposit
Retailers can refuse to take back containers in some circumstanced (e.g. soiled containers, non-scheme containers, collection point full etc)
While deposit returns can be offered as charitable donations, vouchers or wire transfers, a cash redemption must be available.
A retailer can apply for exemption from the return point service on the basis of proximity exemption or environmental health. They should apply to Zero Waste Scotland (administrators of the exemption service).

Definitions

REAN (UK) – Retained EAN. The producer retains an existing product available across the UK (or internationally) and registers the EAN for sale in Scotland’s DRS. UK surcharge applicable. Producer charges a deposit on volumes Placed on the Market in Scotland. The deposit follows the product and consumer pays/can claim a deposit.

REAN (S) - The producer retains an existing product available in Scotland only and registers the EAN for sale in Scotland’s DRS. Producer charges a deposit The deposit follows the product and consumer pays/can claim a deposit.

NEAN (UK) – The producer launches a new product available across the UK (or internationally) and registers the EAN for sale in Scotland’s DRS.
A NEAN is defined as a product which is Placed on Market (PoM) for the first time no more than one month before Scotland’s DRS Go-Live. If Placed on the Market earlier than one month prior it falls into the category of a REAN and a UK surcharge will be applicable.

NEAN (S) - The producer launches a new product intended only for sale in Scotland and registers the EAN for sale in Scotland’s DRS.
It is not intended for supply outside of Scotland and payment of a PF and deposit to Circularity Scotland is applicable on all issues. If these SKUs are sold outside of Scotland
no refund of deposits or fees is payable by Circularity Scotland. The product may be PoM no earlier than 1 month before Go Live. The producer intends to sell this only in Scotland.

OEAN - The introduction of a NEAN creates the existence of an Old EAN or OEAN. OEANs are the outcome from the creation of a new Scottish EAN (NEAN(S)) , a new UK EAN (NEAN (UK)) or a line discontinued for sale in Scotland with no replacement.
OEANs do not need to be registered with SEPA but the producer should register these with Circularity Scotland in order that they can be included in the product list for acceptance by RVMs. This allows the RPO to optionally accept these to avoid littering around the RVM. There will be no RHF payment or deposit payment / redemption.
The producer does not intend it to be PoM in Scotland after Go-Live and it is not a Scheme Article. If produced before 16th August 2023 OEANs may continue to be sold in Scotland after Go Live date as non-Scheme Articles. Circularity Scotland reserve the right to charge an OEAN fee where NEAN volumes have not been PoM as expected (due to delay in NEAN being brought on market) for OEANs being replaced.

RHF – Return Handling Fee

RVM – Reverse Vending machine (accepts a container, returns a deposit)

Cost of Registration for the Scheme

The registration fee is £365 per year, per producer

There is no registration fee for:

Producers with a total annual turnover of £85,000 or less
An organisation that packages and seals in-scope drinks at point of sale to a customer

If registering with a scheme administrator, there will be an additional ‘producer fee’ per container put on the market.

Registration Process

There are two options for registration. Directly with SEPA or registration with a scheme administrator.
Registration directly with SEPA is likely to be too onerous for most producers, and registration with the scheme administrator is likely the simplest, most manageable route.

In either case, you will need to provide:

Details about your business or organisation and relevant contacts
Information about the products you sell in Scotland
Registration fee payment by credit/debit card

Registration through a scheme administrator (link here).

Circularity Scotland are currently the only approved scheme administrator. While you will need to maintain records and supply information to SEPA if requested, the scheme administrator will:

take responsibility for all producer obligations on your behalf (responsible for day-to-day running of the scheme)
submit an application to SEPA on your behalf
submit an operational plan to SEPA on your behalf
comply with regulations on your behalf
manage most of your administrative and data recording duties
You will be charged a ‘producer fee’ on each container which helps to fund the collection and management of all your containers for recycling

Registration directly with SEPA (link here).

You will need to provide the information above, PLUS an operational plan that shows how you will meet your legal obligations
Your application will be assessed, and a decision given in 35 days
60% of the fee will be refunded if your application is refused
You will need to set up and run a collection scheme to collect all containers you put on the market.

Producer Fees

Circularity Scotland charge a producer Fee which supports the ongoing administration of the scheme (beyond annual registration). Below is the current expected fee arrangement. Note: This was originally set in August of 2022, and revised substantially in Dec 2022. Circuularity Scotland have advised that they will continue to review in the lad up to the go-live date, so these costs may change again. As the scheme beds in there is also a risk of ongoing changes, not only after the one-year review, but mid year also as it is a new scheme and cashflows are not yet fully understood.

Producer Fee	Fees
Standard Charges
Plastic	2.21p per unit
Aluminium / Steel	2.03p per unit
Glass	4.10p per unit
UK Surcharge (UK SKUs only)	1.133p per unit
Additional Charges
Day 1 REAN Payment	3 weeks forecast of products Placed on Market (PoM)
Month 1 Invoice Payment	3 weeks forecast of products Placed on Market (PoM)

The standard ongoing charges for Plastic, PET and metal are charged on a container basis. The numbers are based on Producer reporting., at SKU level. As the volumes are reported, an invoice is automatically generated. Invoices include: PoM volumes x deposit x producer fee, UK surcharge (if applicable)., any monthly true-up adjustments (True-ups are the opportunity to correct past reporting errors). Deposits and producer fees are separated on the invoice and VAT is shown. Payments are made by Direct Debit. The first standard invoices will be issued in September 2023. There are no credit terms, payments are due 3 days after invoices raised.

The UK surcharge is for products which have a single EAN for products sold across UK. This is to prevent/offset fraud (intentional or accidental) where products cross the border and are sold in Scotland, without having the 20p deposit attached.

The Day 1 REAN (Retained EAN) payment is specific to the go live of the scheme. It applies to 3 weeks of annualised forecasted data (REANs only). This will be billed on 16/7/23, for payment on 16/8/23. This also includes the UK Surcharge.

The Month1 invoice applies to 3 weeks of annualised forecasted data for NEANs and REANs. This will be calculated as 21/365 of the annual production of each EAN. This will be billed on 1 Aug 2023 and taken by direct debit on 31/8/23.

Labelling

The legislation does not require any change to labelling; however you may choose to do this if you wish. In practice, Circularity Scotland recommend that producers use a new label/barcode to minimise fraud and will charge a higher producer fee (the UK surcharge) to those who do not create a unique EAN for Scotland.

Compliance/Regulation

SEPA acts as the regulator in Scotland.

Additional Notes:

Where drinks are sold for consumption on premise (e.g. pubs/restaurants) the retailer does not need to charge the deposit, as all containers will be collected again on site.

The deposit is not applied to drinks sold to Duty Free for export, nor to consumers outside of Scotland.

The VAT position on the deposit amount is still uncertain. SEPA is engaging with HM Treasury and HMRC to clarify.

References (Scotland):

SEPA Scotland Deposit Return Scheme: https://www.sepa.org.uk/regulations/waste/deposit-return-scheme/

SEPA DRS FAQ page: https://www.sepa.org.uk/regulations/waste/deposit-return-scheme/faqs/#RegistrationFAQ

Circularity Scotland DRS return point exemptions: https://circularityscotland.com

Zero Waste Scotland: https://www.zerowastescotland.org.uk/blog/deposit-return-scheme-return-point-exemptions-update-dec-2022