What can, or can't, be recycled varies from one local authority area to another. That's because they send the bin contents to different plants, with differing capabilities and sorting techniques.
However, BBC World Service carried a half hour programme (just a few days ago) solely about recycling plastics. The programme concentrated on a massive plastics recycling plant (in Dagenham, I seem to remember) which receives the vast majority of plastics sent for recycling in London and the South East.
At that plant, 'rigid' plastic items (such as bottles) were automatically sorted into the two different types of plastic from which they're formed. For example, clear plastic bottles (e.g. 2 litre drinks bottles) are made from one type of plastic but 'cloudy' or coloured plastic bottles (such as milk bottles) are made from a different plastic. This sorting was done automatically, using optical beams.
However, the plant was unable to sort 'film' plastics (such as carrier bags and your bread wrappers) because no automated technology exists to do the job (and manual sorting would be too expensive). For this reason, all 'film' plastics received by the plant are sent for incineration, rather than being recycled.
Chris