UK to Impose Value-Added Tax on Carbon Offset Transactions

The UK will subject the sale of voluntary carbon credits to value-added tax starting in September.

Carbon offsets, which are generated from emissions reductions, were deemed by His Majesty’s Revenue and Customs to be outside the scope of VAT when they were first introduced since the credits could not be resold, and thus there was no secondary market for trading in the assets.

But in light of the emergence of a secondary marketplace for carbon credits since then, some transactions will be subject to VAT at the standard rate of 20% from Sept. 1, HMRC said in a policy ...