Readers’ forum: Carbon emissions

A client approached me last week asking me whether carbon offsets were tax deductible.

A carbon offset is defined by Greenpeace as a way of paying for others to reduce emissions or absorb carbon dioxide to compensate for one’s own emissions. For example by planting trees to suck carbon out of the atmosphere as they grow or by delivering energy-efficient cooking stoves to communities in developing countries.

I cannot find anything on HMRC’s website on the matter and the only published commentary that I have seen says no more than ‘it all depends’.

Does the way in which it is paid matter? For example an airline includes an option for a business to pay for the offsets at the point of sale when buying a ticket – is that deductible as part of the cost of the journey? Then again if the purpose of carbon credits...