HM Revenue and Customs has published updated guidance about the VAT treatment of voluntary carbon credits.  

From 1 September 2024, VAT needs to be accounted for on certain trades of voluntary carbon credits at the standard rate. 

The following activities are still 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
• Sales of voluntary carbon credits from self-assessed projects with no independent or third-party verification 

Read the full HMRC brief.