Tax discourages carbon offsetting

Offsetting carbon emissions will become subject to VAT from next month thanks to EU regulations that state any 'service' must pay tax.

The opportunity to offset carbon emissions has become popular with many environmentally responsible travellers, but the new tax could put many off. It is estimated that last year companies and as many as 500,000 individuals in the UK spent around £8 million on offsetting.

Among the companies in the travel industry which encourage travellers to buy carbon credits to offset their emissions are British Airways and

"Charging VAT could potentially turn consumers away from offsetting if the government is creaming off some of the proceeds. Our concern is that money which is supposed to help save the planet is going into government coffers. It has already been a very hard battle for some of our members to buy into the idea of offsetting because of the doubling of air passenger duty," comments a spokeswoman from travel industry body, ABTA.

Airports and airlines are also set to be hit by the new tax, which will increase the cost of carbon credits by almost a fifth. East Midlands airport has committed to becoming carbon neutral for its ground operations, and all business class airline Silverjet offsets carbon emissions from its flights.

Written by: Nick Purdom

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Tax Discourages Carbon Offsetting