Biodegradable plastic offers an alternative to conventional plastic for use in agriculture. However, slower degradation in the environment compared to industrial composting and high production of microplastics is of growing concern and poses the question whether they represent a viable replacement. It remains unclear whether observed effects of biodegradable plastics on the soil microbial community and plant nutrient uptake are from biodegradation or from the abiotic effects of the microplastics themselves. The aim of this study was to quantify the biodegradation of the bioplastic poly(3-hydroxybutyrate-co-3-hydroxyvalerate) (PHBV), at increasing microplastic loadings (0.06–3.2% w/w) via pyrolysis/gas chromatography-mass spectrometry (Py/GC-MS) alongside effects on soil health and plant growth (Zea mays L.). Between 1.5 and 5% of PHBV microplastic was degraded in soil after 8 weeks, with the rate declining with increasing PHBV concentrations due to microbial nitrogen (N) limitation, demonstrated by increased investment in N-cycling enzymes. Plants were also limited by both N and phosphorus (P). Greater extractable soil ammonium and nitrate contradicted N limitation, however, increases in soil hydrophobicity likely limited mobility, and thus plant and microbial utilisation. As a result, increased C from PHBV degradation did not result in a concurrent increase in microbial biomass, which was reduced under higher PHBV microplastic loading, indicating low microbial carbon use efficiency. While high PHBV microplastic loadings resulted in significant effects on the microbial community size and structure, soil properties and plant growth, there were minimal effects at low PHBV concentrations (0.06% w/w). Observations of nutrient limitation at higher plastic loadings has significant implications for the design of standard biodegradation assays, which must consider both abiotic and biotic effects of microplastic on soil nutrient cycling.