- HMRC’s note explains the VAT treatment of ecosystem service payments and related instruments, especially BNG units/credits and carbon credits.
- It sets out when these credits are treated as supplies subject to VAT and when they are considered outside the scope of VAT.
- The VAT guidance applies to statutory schemes such as biodiversity net gain and nutrient neutrality, as well as voluntary schemes like the Woodland Carbon Code and Peatland Code.
- HMRC also gives general VAT principles for similar non-statutory ecosystem service arrangements.
Source: taxscape.deloitte.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
