UK CBAM explained
What the UK Carbon Border Adjustment Mechanism is, who it applies to, how the levy is worked out and what to do now.
Key facts
What is UK CBAM?
The UK Carbon Border Adjustment Mechanism is a carbon levy on imports of certain carbon-intensive goods.
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 five sectors, defined by specific commodity codes. The liable person is the importer: the person named on the import declaration. A customs broker or freight forwarder filing on your behalf does not take on the liability. A tax representative can file a return for you, but cannot register on your behalf.
Once you meet the £50,000 threshold in Key facts, you must register with HMRC, report embedded emissions and pay the levy. Imports before 1 January 2027 do not count.
| 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 |
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, from actual production data, or default values. These figures use default emission values. HMRC hasn't published UK values yet, so we use the European Commission's published defaults where they exist and sector averages otherwise. If your suppliers emit less than the default, you're overpaying, and verified supplier data is how you prove it.
The CBAM rate has not yet been published. It will be set per sector, per quarter, from the UK ETS price.
Carbon Price Relief: If a carbon price was paid on the goods under a qualifying mandatory scheme in the country of production (for example, an emissions trading scheme), that amount can be deducted. The carbon price paid must be independently verified on HMRC's Carbon Pricing Verification Form, and the relief is capped at the CBAM liability.
Sector averages CBAMcheck uses where a product has no default value
| Product | Estimate |
|---|---|
| Iron & steel (crude steel) | 1.92 tCO₂/t crude steel |
| Aluminium (primary) | 15.1 tCO₂e/t primary aluminium |
| Cement (clinker) | 0.8 tCO₂/t clinker |
| Fertiliser (ammonia) | 2.4 tCO₂/t ammonia |
| Hydrogen | 11 tCO₂e/t H2 |
Key dates
What importers need to do
Assess your exposure now
Find which of your imports fall under CBAM commodity codes and estimate your annual levy. Your CDS data has what you need: commodity codes, countries of origin and import weights.
Register with HMRC
If you meet the threshold during 2027, register by 31 January 2028. You are liable for the levy on 2027 imports once you meet the threshold.
Engage your in-scope suppliers
Contact suppliers of CBAM goods and request verified emissions data. Where a supplier emits less than the default, its actual figure lowers your levy. Overseas suppliers can take months to produce verified data.
Set up your reporting process
The first accounting period covers the full calendar year 2027, with the return and payment due 31 May 2028. From 2028, accounting periods are quarterly: the Q1 2028 return is due 31 July 2028, Q2 2028 is due 29 September 2028, and thereafter returns are due on the last working day of the second month after the quarter ends. You will need systems to track in-scope imports, embedded emissions, and any carbon prices paid at origin, and records must be kept for 6 years.
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 simplest source is your CDS (Customs Declaration Service) data.
You can download your declarations from HMRC, or ask your customs broker or freight forwarder for an extract with 8 or 10 digit commodity codes.
If your freight forwarder or customs broker declares in their own name, ask them for the data they hold for you: the obligation falls on the importer of record.
CBAMcheck takes CSV or Excel files, matches each commodity code to the CBAM scope and prices it on default emission values.
UK CBAM vs EU CBAM: key differences
The EU CBAM's definitive regime began on 1 January 2026. The UK CBAM is a separate regime with different rules. Complying 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 | CBAM rate derived from UK ETS price, adjusted for free allocation | EU ETS allowance price |
| Payment mechanism | Levy paid via HMRC returns | EU centralised CBAM registry |
| Reporting frequency | Annual (2027), quarterly from 2028 | Annual declaration, due 30 September (quarterly was transitional only) |
| Default emissions values | One value per product, set by Treasury notice (not yet published) | Country-specific defaults |
| De minimis | £50,000 (30-day or rolling 12-month tests) | 50 tonnes per year (2025 Omnibus package) |
Common questions
What if I import below the £50,000 threshold this year but may exceed it next year?+
Once you meet either threshold test in Key facts, you must register. If you are close, check your imports each month.
Do I need verified emissions data from my suppliers?+
No. Without it, default values apply. Where a supplier emits less than the default, its verified data lowers your levy, so start with your largest suppliers.
What if I import through a customs broker or freight forwarder?+
The liable person is the importer: the person named on the import declaration. A customs broker or freight forwarder filing the declaration for you does not take on the liability. A tax representative can file a CBAM return for you, but cannot register on your behalf.
Will goods from the EU attract a carbon price deduction?+
Only if a carbon price was paid on the goods under a qualifying mandatory scheme, such as the EU ETS. There is no blanket exemption for EU-origin goods. The carbon price must be independently verified on HMRC's Carbon Pricing Verification Form, and the relief is capped at the CBAM liability. UK-EU emissions trading linkage has been agreed in principle but has no timetable and is not in force.
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. The CBAM rate is set from its price.
Carbon price at origin
A carbon cost already paid in the country where the goods were produced, for example under the EU ETS. It is deducted from the UK CBAM levy.
Default emission factor
The value set by HMRC for each product, used where verified supplier data is not available. Not yet published.
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 system. Your CDS data has the commodity codes, countries of origin and weights a CBAM estimate needs.
Find out what CBAM will cost your business
Upload your import data for a free estimate.