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 the UK CBAM regulations, including the Emissions and Verification Regulations made 8 September 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 five sectors, defined by specific commodity codes. The liable person is the importer — the person named on the import declaration. A customs broker, freight forwarder, or agent 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.
There is a registration threshold of £50,000 of CBAM goods, with two tests: you expect to import £50,000 or more in the next 30 days, or your imports reach £50,000 over the rolling 12 months, checked on the 1st of each month. Imports before 1 January 2027 do not count towards the threshold. Once you meet either test, you must register with HMRC, report embedded emissions, and pay the levy.
| 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 HMRC's final CBAM regulations. Partial code matches may not be in scope.
How is the liability calculated?
The calculation for each in-scope import line is:
Embedded emissionsare calculated as: import weight (tonnes) × emission intensity factor (tCO2e per tonne). This covers both direct process emissions and indirect energy-related emissions in production. HMRC's Systems Boundaries Reference Document defines which production processes and emissions sources count.
Emission intensity factors are either supplier-verified (using actual production data) or HMRC default values. The defaults have not yet been published — they are due before the end of 2026 and will be global averages weighted by the production volumes of major UK trading partners, not country-specific like the EU's. HMRC has stated it intends the defaults to carry no advantage over using real data.
The CBAM rate has not yet been published. It will be set per sector, per quarter, derived from the UK ETS price adjusted for free allocation. The government has committed to publishing an illustrative rate in autumn 2026.
Carbon Price Relief: If a carbon price was actually 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.
Default-basis emission intensity estimates used by CBAMcheck
| 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 |
These are estimates from the named public sources, not HMRC values. HMRC's default emissions values are due before the end of 2026 and will be global averages weighted by the production volumes of major UK trading partners. A single global figure is used per product — country of origin does not change the default basis.
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 indicative factors. If you're below the £50k threshold you can monitor; once you meet either threshold test you must register. Your CDS export from HMRC contains the data you need — commodity codes, countries of origin, and import weights.
Register with HMRC once the service opens
The registration service opens by 1 January 2028, with a backstop registration deadline of 31 January 2028. You do not need to be registered before importing in 2027, but you are still liable for the levy on 2027 imports once you meet the threshold. GOV.UK guidance explains how to work out your registration date.
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
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 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's definitive regime began on 1 January 2026, following a transitional phase from October 2023 and significant simplifications under the EU's 2025 Omnibus package. 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 | 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 | Global averages weighted by major UK trading partners (due end 2026) | 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?+
The threshold has two tests, checked on an ongoing basis: whether you expect £50,000 of CBAM goods in the next 30 days, and whether your rolling 12-month total reaches £50,000, checked on the 1st of each month. Imports before 1 January 2027 do not count. If you're close to the limit, monitor your imports carefully — once you meet either test you 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. You will be able to use HMRC default emissions values, which are due to be published before the end of 2026 as global averages weighted by the production volumes of major UK trading partners. For suppliers whose goods are produced with lower-than-average emissions, verified data could reduce your liability. It's worth starting supplier conversations early, particularly for your highest-value lines.
What if I import through an agent or freight forwarder?+
The liable person is the importer — the person named on the import declaration. A customs broker, freight forwarder, or agent filing the declaration on your behalf does not take on the liability. A tax representative can file a CBAM return for you, but cannot register on your behalf. Check your customs arrangements and confirm who is named on your import declarations.
Will goods from the EU attract a carbon price deduction?+
Only if a carbon price was actually paid on the goods under a qualifying mandatory scheme, such as the EU ETS. There is no blanket exemption for EU-origin goods — Carbon Price Relief is for carbon costs actually paid, not simply for importing from an EU country. 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.
Is the estimate from CBAMcheck legally binding or sufficient for HMRC filing?+
No. CBAMcheck provides an indicative estimate based on indicative emission 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: SI 2026/802 and SI 2026/809 (made 13 July 2026), SI 2026/830 (14 July 2026), SI 2026/995 Emissions and Verification (8 September 2026), GOV.UK CBAM guidance pages (16 July 2026), HMRC Systems Boundaries Reference Document, HM Treasury Autumn Budget 2024. This page provides a summary for informational purposes and does not constitute legal or tax advice. Last reviewed August 2026.
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