Regulatory guide
UK CBAM explained
A plain-English guide to the UK Carbon Border Adjustment Mechanism — what it is, who is affected, how the levy is calculated, and what you need to do before January 2027.
Based on HMRC draft secondary legislation published 10 February 2026. This page is for informational purposes and does not constitute legal or tax advice.
Key facts
What is UK CBAM?
The UK Carbon Border Adjustment Mechanism is a carbon levy on imports of certain carbon-intensive goods. It was confirmed in the Autumn Budget 2024 and takes effect on 1 January 2027.
Its purpose is to prevent carbon leakage — the risk that UK manufacturers, who pay a carbon cost under the UK Emissions Trading Scheme (UK ETS), lose market share to cheaper imports from countries with weaker or no carbon pricing. CBAM levels the playing field by applying a comparable carbon cost to imported goods at the border.
It is not a tariff on the goods themselves. It is a charge based on the carbon intensity of production. Companies that import from countries with strong carbon pricing pay less or nothing. Companies importing from countries with no carbon pricing pay more.
Who is in scope?
UK CBAM applies to importers of goods in six sectors, defined by specific commodity codes. The obligation falls on the importer of record — the business named on the customs declaration.
There is a de minimis threshold: importers with less than £50,000 per year in total imports of in-scope goods are not required to register or pay. If you cross this threshold in any calendar year, you must register with HMRC, report embedded emissions, and purchase CBAM certificates.
| Sector | Key commodity codes |
|---|---|
| Aluminium | 7601, 7603–7616, 7618 |
| Cement | 2523, 6810, 6811 |
| Fertilisers | 2814, 2834, 3102, 3105 |
| Hydrogen | 2804.10 |
| Iron | 7201–7207, 7218 |
| Steel | 7208–7217, 7219–7229, 7304–7306 |
Exact scope is defined at 8–10 digit commodity code level in the HMRC draft secondary legislation. Partial code matches may not be in scope.
How is the liability calculated?
The calculation for each in-scope import line is:
Embedded emissions are calculated as: import weight (tonnes) × emission intensity factor (tCO2e per tonne). This covers both direct process emissions and indirect energy-related emissions in production.
Emission intensity factors are either supplier-verified (using actual production data) or HMRC defaults. Default factors are deliberately conservative — they represent the average for a given sector and typically result in a higher liability than actual emissions would. Using verified supplier data can significantly reduce what you owe.
Carbon price deduction: If a carbon price was paid in the country of production — for example, under the EU ETS or South Korea's ETS — that amount is deducted. This is designed to avoid double taxation and encourage trading partners to maintain their own carbon pricing.
HMRC default emission factors (indicative)
| Product | Default factor |
|---|---|
| Aluminium | 6.7 tCO2e/t |
| Cement (clinker) | 0.82 tCO2e/t |
| Fertiliser (ammonia) | 2.0 tCO2e/t |
| Hydrogen | 10.9 tCO2e/t |
| Pig iron | 1.5 tCO2e/t |
| Hot-rolled steel | 1.9 tCO2e/t |
These are indicative figures based on the HMRC draft secondary legislation. Final values will be set in the enacted legislation.
Key dates
What importers need to do
Assess your exposure now
Identify which of your imports fall under CBAM commodity codes and estimate your annual liability using default factors. If you're below £50k you can monitor; above it you must register. Your CDS export from HMRC contains the data you need — commodity codes, countries of origin, and import weights.
Register with HMRC before your first 2027 import
Registration is expected to open in late 2026. You must be registered before importing any in-scope goods in 2027. Details of the registration process will be published on GOV.UK.
Engage your in-scope suppliers
Contact suppliers of CBAM goods and request verified emissions data. Using actual production emissions instead of defaults can materially reduce your liability. Start this process early — suppliers, especially overseas ones, may need significant lead time to produce or obtain verified data.
Set up your reporting process
Annual returns cover the full calendar year 2027 and are filed in mid-2028. From Q3 2028, reporting becomes quarterly. You will need systems to track in-scope imports, embedded emissions, and any carbon prices paid at origin throughout the year.
How to get your import data
To assess your CBAM exposure, you need a record of your imports with commodity codes, countries of origin, and weights (or values). The easiest source is your CDS (Customs Declaration Service) export.
You can export your declarations from the CDS dashboard on GOV.UK, or ask your customs agent or freight forwarder for a data extract. The file will typically include commodity codes at 8 or 10 digits — CBAM scope is defined at this level, so partial codes will not match correctly.
If you use a freight forwarder or customs agent who declares in their own name, check with them — the CBAM obligation falls on the importer of record, and you may need to request data they hold on your behalf.
CBAMcheck accepts CSV or Excel exports. We match your commodity codes against the in-scope list and calculate an estimated liability using HMRC default factors.
UK CBAM vs EU CBAM — key differences
The EU CBAM has been in a transitional phase since October 2023 and full financial obligations begin in 2026. The UK CBAM is a separate regime with meaningfully different rules. Compliance with one does not satisfy the other.
| Feature | UK CBAM | EU CBAM |
|---|---|---|
| Start date | 1 Jan 2027 | 1 Jan 2026 (full) |
| Sectors | Aluminium, cement, fertiliser, hydrogen, iron, steel | Similar, plus electricity |
| Carbon price link | UK ETS allowance price | EU ETS allowance price |
| Certificate system | HMRC-administered certificates | EU centralised CBAM registry |
| Reporting frequency | Annual (2027), quarterly from 2028 | Quarterly |
| De minimis | £50,000/year | €150 per consignment |
Common questions
What if I import below the £50,000 threshold this year but may exceed it next year?+
The threshold is assessed on a calendar-year basis. If you're close to the limit, monitor your imports carefully. Once you cross £50k in a year, you are in scope for that year and must register. It is worth assessing your exposure now so you're not caught off guard.
Do I need verified emissions data from my suppliers?+
No, not initially. You can use HMRC default emission factors, which are conservative estimates. However, for suppliers whose goods are produced with lower-than-average emissions, verified data could significantly reduce your liability. It's worth starting supplier conversations early, particularly for your highest-value lines.
What if I import through an agent and they declare in their name?+
If your customs agent declares in their own name as importer of record, the CBAM obligation technically falls on them — but this is unusual for commercial imports. Check your customs arrangements and confirm who is named on your import declarations.
Will goods from the EU attract a carbon price deduction?+
Yes, if the goods were produced under the EU ETS and an EU carbon price was paid. The deduction is for carbon costs actually paid in the country of origin — not simply for importing from an EU country. Documentation will be required to claim this offset.
Is the estimate from CBAMcheck legally binding or sufficient for HMRC filing?+
No. CBAMcheck provides an indicative estimate based on default factors to help you understand your exposure. For actual HMRC registration and reporting, you will need precise import data, commodity-code-level verification, and potentially professional advice.
Glossary
Embedded emissions
The greenhouse gases emitted during the production of a good, including process emissions and energy used in manufacturing. Measured in tonnes of CO2 equivalent (tCO2e).
UK ETS
The UK Emissions Trading Scheme — the domestic carbon market that sets a price for emissions. UK CBAM certificates are priced at the UK ETS allowance price.
Carbon price at origin
A carbon cost already paid in the country where the goods were produced (e.g. under the EU ETS). This is deducted from the UK CBAM liability to avoid double counting.
Default emission factor
HMRC-published values used when verified supplier data is unavailable. They represent a conservative (high) estimate and are set per sector and product type.
Importer of record
The business legally responsible for the import — typically the entity named on the customs declaration. This is who bears the CBAM obligation.
CDS
The Customs Declaration Service — the UK's customs IT system. Your CDS export contains the commodity codes, countries of origin, and import weights needed for CBAM assessment.
Sources: HMRC draft secondary legislation (10 February 2026), HM Treasury Autumn Budget 2024, HMRC CBAM technical note. This page provides a summary for informational purposes and does not constitute legal or tax advice. The legislation may change before final enactment. Last reviewed June 2026.
Find out what CBAM will cost your business
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