Life cycle assessment modelling of multi-cycle recycling systems is challenging. There is still neither consensus on applying allocation approaches nor a one-size-fits-all solution. This study proposes an allocation approach embedded with the responsibility distribution of stakeholders rather than the standard approach, which is assessed based on stages. It is applied to the case study of plastic packaging recycling and compared to simple and economic allocation cut-off methods. A total of four multiple recycling or cascade utilisation scenarios are assessed, consisting of the linear system (disposal), mechanical recycling, waste to energy and chemical recycling, for at least one of the cycles. Scenario 2, with mechanical recycling as the end-of-life management in all three multiple cycles, has the lowest overall GHG emissions (∼4.8 t CO2eq/t plastic packaging) regardless of allocation method, even after considering deducted savings due to the degraded quality along the cycles. The simple cut-off method could not drive the selection in the first cycle toward the recycling alternatives (Scenario 2–4) with overall lower emissions as the GHG saving from utilising recycled resources are accounted for in the second cycle. Regarding eutrophication potential, as the burdening impact of disposal is significantly higher, recycling options accounted for following the simple cut-off method are preferable even when the burdening effect is entirely embraced by the first cycle without the unburdening accounting. Economic allocation cut-offs provide a better incentive to recycle in the assessed cycles. However, the standard accounting is by stages such as material production, product manufacturing, recycling and disposal. It is unclear whose responsibility, either the raw material producer (MP), the product manufacturer (PM) or the consumer (C). The proposed method with defined responsibility (e.g. 6.2 t CO2eq/t by MP; 2.9 t CO2eq/t by PM; 0.5 t CO2eq/t by C in Scenario 1) is more effective for environmental mitigation strategies (e.g. taxation and incentives, deposit refund scheme) of the plastic life cycle. The scenarios assessment serves as a stepping stone to optimise the allocation among the identified stakeholders in future work according to local conditions.