HMRC have published Revenue & Customs Brief 7/2024on a change to the VAT treatment of voluntary carbon credits from 1 September 2024. From that date, VAT will need to be accounted for at the standard rate on certain transactions involving voluntary carbon credits (currently they are treated as outside the scope of VAT).
Voluntary carbon credits traded on terminal markets that are within the terms of the VAT (Terminal Markets) Order, SI 1973/173, will be eligible for zero rating from 1 September 2024.
The following activities will remain outside the scope of VAT:
the first issue of a voluntary carbon credit by a public authority;
the holding of voluntary carbon credits as an investment, where there is no economic activity;
donations made to voluntary carbon credit projects; and
sales of voluntary carbon credits from self-assessed projects with no independent or third-party verification.
HMRC have published Revenue & Customs Brief 7/2024on a change to the VAT treatment of voluntary carbon credits from 1 September 2024. From that date, VAT will need to be accounted for at the standard rate on certain transactions involving voluntary carbon credits (currently they are treated as outside the scope of VAT).
Voluntary carbon credits traded on terminal markets that are within the terms of the VAT (Terminal Markets) Order, SI 1973/173, will be eligible for zero rating from 1 September 2024.
The following activities will remain outside the scope of VAT:
the first issue of a voluntary carbon credit by a public authority;
the holding of voluntary carbon credits as an investment, where there is no economic activity;
donations made to voluntary carbon credit projects; and
sales of voluntary carbon credits from self-assessed projects with no independent or third-party verification.
