Skip links

UK carbon credits subject to VAT Sept 2024

HMRC changes scope of VAT due to changes in carbon credit market

In the UK, the sale of carbon credits are outside of the scope of VAT as there was no secondary market for onward supply.  The UK’s HMRC is changing this from 1 September 2024. The shift in policy is due to the emergence of a secondary market trading and businesses incorporating voluntary carbon credits into their onward supplies.

From 1 September, voluntary carbon credits will therefore be subject to UK VAT at the secondary rate.

A carbon credit is a tradable instrument issued by an independently verified carbon-crediting programme. It represents a reduction or removal of one metric tonne of carbon dioxide, or an equivalent amount of greenhouse gases (GHGs) from the atmosphere measured by reference to a baseline scenario. Voluntary carbon credits are any carbon credits that are not compliance market credits.


Get our latest news right in your mailbox