Inland water bodies are recognised as dynamic sites of carbon processing, and lakes and reservoirs draining peatland soils are particularly important, due to the potential for high carbon inputs combined with long water residence times. A carbon budget is presented here for a water supply reservoir (catchment area ~ 9 km2) draining an area of heavily eroded upland peat in the South Pennines, UK. It encompasses a two year dataset and quantifies reservoir dissolved organic carbon (DOC), particulate organic carbon (POC) and aqueous carbon dioxide (CO2(aq)) inputs and outputs. The budget shows the reservoir to be a hotspot of fluvial carbon cycling, as with high levels of POC influx it acts as a net sink of fluvial carbon and has the potential for significant gaseous carbon export. The reservoir alternates between acting as a producer and consumer of DOC (a pattern linked to rainfall and temperature) which provides evidence for transformations between different carbon species. In particular, the budget data accompanied by 14C (radiocarbon) analyses provide evidence that POC-DOC transformations are a key process, occurring at rates which could represent at least ~ 10% of the fluvial carbon sink. To enable informed catchment management further research is needed to produce carbon cycle models more applicable to these environments, and on the implications of high POC levels for DOC composition.