BNG - subject to VAT?

RE: BNG - subject to VAT?

2026-07-06T08:35:29Z

In North Yorkshire our finance bods reached a conclusion that application fees and monitoring fees for Habitat Banks that we agree to regulate are VAT-able, as they are a discretionary service, which customer could get from elsewhere and thus it would be anti-competitive to undercut the market by offering without VAT.

We don't yet have any council owned HBs, so have not crossed that bridge yet.... But I would imagine the same reasoning applies that its anti-competitive if we offer discounted Units so we should add VAT to the BUs we sell.

In contrast, for BNG Monitoring fees that we charge developers in a Dev Management scenario (by mechanism of a s106 or a UU tied to the permission) then these can be zero VAT as these are to defray our costs in monitoring BNG associated with the permission - whether on-site or a bespoke offsite solution on developer's own land where the s106 includes this land.

Where a developer has bought BUs from a third party habitat bank, obviously there is another organisation, the RB, doing the monitoring and charging their fees. So we can't charge them again.

RE: BNG - subject to VAT?

2026-07-06T07:11:22Z

Hi Suzanne

I do not see that the Council itself is providing any sort of different service for the monitoring of S106 as it does with BNG, there is a VAT able product for BNG but the Council itself is providing the same function. I would be interested to know how your finance team have reached this conclusion.

Would be interested to know it the outcome of this conversation.

BNG - subject to VAT?

2026-07-01T14:03:31Z

Our finance team have recently advised that all financial BNG contributions secured through a s106 agreement are liable for VAT.

The view that we have used to date is that a BNG financial contribution paid to the local authority under a s106 agreement is generally treated as a statutory planning obligation and is typically outside the scope of VAT, BUT, the purchase of BNG units/credits is often VATable.

The suggestion is that we now revisit historic BNG contributions secured through s106 agreements and reissue demand notices to the developer with added VAT.

It would be helpful to know how other local authorities treat the BNG contributions secured through a s106 agreement in relation to VAT. Thank you.