UK carbon border adjustment mechanism (UK CBAM) from 2027

What the UK CBAM is and why it exists

UK manufacturers of steel, aluminium, cement, fertiliser and hydrogen pay for their emissions under the UK ETS. Imports from countries with no or lower carbon prices do not, which risks "carbon leakage": production moving abroad with no climate benefit. The CBAM charges importers a price equivalent to the UK carbon price on the emissions embedded in those goods, less any carbon price already paid where they were made. It is a tax administered by HMRC, not an emissions trading scheme, and it is separate from the EU's CBAM, which applies to goods entering the EU.

The legal framework was set by primary legislation and the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026/809), with HMRC guidance published in July 2026.

Goods in scope

Goods are identified by commodity (tariff) code, so your customs data tells you whether you are affected. Only goods imported in the course of business count. In the first years the charge covers direct emissions, including those in certain precursor goods; indirect (electricity) emissions are deferred until 2029 at the earliest.

Registration, the £50,000 test and group treatment

You must register with HMRC if, on any day, the value of CBAM goods you imported in the previous 12 months reached £50,000, or you expect imports to exceed £50,000 in the next 30 days. The threshold was raised from the £10,000 originally proposed. The liable person is generally the importer; where goods are not subject to customs control it is the person on whose behalf they are imported. Connected companies can apply for group treatment, with one representative member filing and paying. Deregistration is possible if you fall below the threshold for 12 months.

How the charge is calculated

CBAM liability = CBAM rate × embedded emissions − carbon price relief

• CBAM rate: HMRC sets a rate per sector each quarter, reflecting the effective UK carbon price after free allocation and other reductions.
• Embedded emissions: either independently verified actual emissions data from the overseas producer, or government default values per product, which HMRC will publish before 1 January 2027. Defaults are set conservatively, so importers with low-carbon suppliers benefit from obtaining verified data.
• Carbon price relief: a reduction for a qualifying carbon price already paid where the goods were produced, supported by a Carbon Price Verification Form completed by an accredited verifier.

The tax point is the date goods are released from customs control, or the date they enter the UK if not under customs control.

Returns, payment and records

Returns are required even where the liability is nil, tax agents can file for you, and no deferment scheme is planned. Keep customs declarations, supplier emissions data, verification reports and calculations; HMRC's record-keeping and penalty rules follow its standard regimes.

Tip: start asking overseas suppliers now for installation-level emissions data and any evidence of carbon prices they pay. Default values will usually cost more than verified data from an efficient producer.

How to prepare, step by step

1. Screen your imports by commodity code

   Pull 12 months of customs data and flag the CBAM codes; total the value to test the £50,000 threshold.

2. Register with HMRC when the service opens

   Consider group treatment if several connected companies import.

3. Collect supplier emissions data

   Request verified actual emissions per product from producers, or plan to use default values, and gather evidence of any foreign carbon price paid.

4. Model the cost

   Apply the expected CBAM rate to embedded emissions for each product line to see which suppliers and routes become more expensive.

5. Set up records and the return process

   Capture the tax point, quantities, emissions basis and relief claims for every consignment, ready for the first return by 31 May 2028.

Northern Ireland and the EU CBAM

The EU CBAM has applied in its definitive form since 1 January 2026 to goods entering the EU, and UK exporters of steel, aluminium, cement and fertiliser to the EU already face it. Goods moving into Northern Ireland from Great Britain are not imports for UK CBAM purposes, but Northern Ireland businesses importing from outside the UK and EU should check both regimes. If the UK and EU conclude the linking of their emissions trading schemes, both sides intend to exempt each other's goods from CBAM.

How it differs across the UK

E England

A UK-wide tax administered by HMRC; no national differences.

W Wales

A UK-wide tax administered by HMRC; no national differences.

S Scotland

A UK-wide tax administered by HMRC; no national differences.

NI Northern Ireland

Goods moving from Great Britain to Northern Ireland are not imports for UK CBAM; imports from outside the UK into Northern Ireland are covered. Northern Ireland businesses trading with the EU should also check the EU CBAM.

Key dates

• 1 Jan 2027

  UK CBAM begins: liability on imports of aluminium, cement, fertiliser, hydrogen, iron and steel

  Importers of CBAM goods EWSNI

• 1 Jan 2028

  UK CBAM moves to quarterly accounting periods

  Registered CBAM importers EWSNI

• 31 May 2028

  First UK CBAM return and payment, covering 1 January to 31 December 2027

  Registered CBAM importers EWSNI

• 2029

  Earliest date for indirect (electricity) emissions to be added to UK CBAM

  Importers of CBAM goods EWSNI Proposed

Dates marked “Proposed” are announced or consulted on but not yet law. See the full deadlines calendar.

Penalties and enforcement

Where to do it: official services

• UK CBAM: force of law notice and reference document Guidance

  HMRC's published guidance on scope, registration, calculation, relief and returns. HMRC EWSNI

• CBAM rate and carbon price relief regulations 2026 Guidance

  The regulations setting how HMRC calculates the CBAM rate and determines relief. legislation.gov.uk EWSNI

• Trade Tariff: look up commodity codes Tool or calculator

  Check the commodity codes of your imports against the CBAM scope. HMRC EWSNI

The law behind this

• Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026/809) EWSNI
• Finance Act 2026 (UK carbon border adjustment mechanism provisions) EWSNI

Terms used in this guide

CBAM goods

Imported products in the aluminium, cement, fertiliser, hydrogen, iron and steel sectors identified by commodity code and subject to the UK CBAM.

Embedded emissions

The greenhouse gas emissions released in producing a good, including certain precursor materials, on which the CBAM is charged.

Default value

A government-set emissions figure per product used where an importer does not have verified actual emissions data.

Carbon price relief

A reduction in CBAM liability for a qualifying carbon price already paid in the country of production, evidenced by a verification form.

CBAM rate

The price per tonne of embedded emissions set by HMRC for each sector each quarter, based on the effective UK carbon price.

Full glossary