Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent discussions she has had with (a) HMRC and (b) stakeholders on the VAT treatment of voluntary payments made to international carbon offsetting projects.

HMRC engaged with stakeholders prior to clarifying the policy on the VAT treatment of voluntary carbon credits in 2024.

As of 1 September 2024, payments made to non-statutory carbon offsetting projects for the purchase of voluntary carbon credits are in the scope of VAT where the place of supply is the UK. Payments made to international carbon offsetting projects are outside the scope of UK VAT.