Key takeaways
- The UK CBAM takes effect on 1 January 2027 and applies to imports of aluminium, cement, fertilisers, hydrogen, and iron and steel products into the United Kingdom.
- The UK importer is the liable person and must register with HMRC, file CBAM returns, and pay any CBAM due – EU CBAM compliance by your supplier does not remove your UK CBAM liability.
- Without verified emissions data from your EU producer, HMRC default values apply, which are typically less favourable and can drive up your landed costs.
What is CBAM and what does it mean for UK importers?
CBAM stands for Carbon Border Adjustment Mechanism – a carbon price on imports of certain carbon-intensive goods. The aim is to ensure that products manufactured outside the UK face a carbon cost comparable to UK production under the UK Emissions Trading Scheme (UK ETS), preventing carbon leakage.
For UK importers, this means a new tax obligation alongside customs duties and VAT. The liable person is the importer named on the customs declaration – responsible for registration, reporting and payment, regardless of where the goods originate.
How does the UK CBAM differ from the EU CBAM?
The EU CBAM has been in a transitional phase since 2023 and enters its definitive phase in 2026. The two systems share the same objective but are legally separate.
| Feature | UK CBAM | EU CBAM |
| Full application from | 1 January 2027 | 1 January 2026 |
| Sectors | Aluminium, cement, fertilisers, hydrogen, iron and steel | Same, plus electricity |
| Liable person | UK importer | EU importer |
| Mechanism | Direct tax to HMRC | Purchase and surrender of CBAM certificates |
| Reporting | Annual in 2027, then quarterly | Quarterly |
| Foreign carbon price | Recognised via Carbon Price Relief | Recognised with verified evidence |
The key point: EU CBAM compliance does not remove your UK CBAM liability. EU-origin goods are treated as non-UK origin and fall fully within scope.
Which goods fall within the UK CBAM scope?
The UK CBAM applies to specific goods within five sectors, identified by the commodity codes listed in the Annex of the official policy summary.
- Aluminium: Unwrought aluminium, powders, bars, plates, foil, tubes, structures and other articles (CN chapters 7601–7616). Scrap is excluded.
- Cement: Clinkers, Portland cement, aluminous cement and other hydraulic cements (CN codes 2507 00 80 and 2523).
- Fertilisers: Nitric acid, ammonia, nitrogenous fertilisers and mixed NPK fertilisers (CN codes 2808, 2814, 3102, 3105), excluding certain phosphate-potassium fertilisers.
- Hydrogen: Pure hydrogen under CN code 2804 10 00.
- Iron and steel: Agglomerated iron ores and a broad range of iron and steel products under CN chapter 72 and onward. Ferro-alloys and ferrous scrap are excluded.
The mechanism also captures embodied emissions in precursor goods used in complex CBAM goods. Returned goods relief and goods of UK origin remain outside scope.
Who is affected by UK CBAM and when do you need to register?
A business becomes registerable once it meets the £50,000 minimum registration threshold under one of two tests:
- Forward-looking test: On any given day, you expect the value of CBAM goods to be imported in the next 30 days to meet or exceed £50,000.
- Backward-looking test: On the first day of any month, the value of CBAM goods imported over the preceding 12 months meets or exceeds £50,000.
If either test is met, you must register with HMRC. For 2027, the backward-looking test only looks back to 1 January 2027. The value used is the same as for customs duty purposes.
Is there a UK CBAM registry like in the EU?
The EU operates a centralised CBAM registry. The UK does not: registration is handled via the Government Gateway, similar to other UK tax obligations. For the first CBAM year, businesses have until 31 January 2028 to register for goods imported during 2027. From 2028, the standard 30-day registration window applies.
What is the UK CBAM timeline and what are the key deadlines?
Several milestones in the run-up to 2027 matter for compliance preparation.
| Date | Milestone |
| 10 April – 21 May 2026 | Second technical consultation on draft secondary legislation |
| Later in 2026 | Final secondary legislation expected to be laid |
| 1 January 2027 | UK CBAM takes effect; first accounting period begins |
| 31 January 2028 | Latest registration date for businesses liable in 2027 |
| 31 May 2028 | First CBAM return and payment due (covering full year 2027) |
| From 1 January 2028 | Transition to quarterly accounting periods |
From the second accounting year, each return is due roughly two months after the end of the quarter.
What is the status of the UK CBAM consultation?
Primary legislation was introduced through the Finance Act 2026, with draft secondary legislation published in February and April 2026. The second technical consultation runs until 21 May 2026 and covers emissions monitoring and verification, the CBAM rate, and Carbon Price Relief. Final secondary legislation is expected later in 2026.
How is the UK CBAM liability calculated?
The calculation logic is:
CBAM liability = (Embodied emissions x CBAM rate) − Carbon Price Relief
Three elements drive the result:
- Embodied emissions: Direct emissions from production, in tonnes of CO₂ equivalent (tCO₂e) per functional unit.
- CBAM rate: A sector-specific rate, set quarterly, reflecting the effective UK carbon price under the UK ETS. It will rise over time as free allowances are phased out.
- Carbon Price Relief (CPR): A deduction for any qualifying carbon price already paid in the country of production, such as under the EU ETS.
CPR can reduce a liability to zero but never generate a refund.
When can you use CBAM default values?
For each CBAM good, HMRC will publish a single default emissions value as a fallback where verified actual data is not available. Defaults will be set conservatively – typically resulting in a higher CBAM bill than verified data would. This creates a strong incentive to obtain verified emissions data from EU suppliers.
For complex goods, you can use default values for precursor goods even if you use actual data for the final good, but not the other way round.
Do you need a CBAM certificate under the UK system?
A common question from importers familiar with the EU CBAM is whether they will need to buy CBAM certificates. The answer is no. Unlike the EU system, the UK CBAM is a direct tax: the liability is declared on a CBAM return and paid to HMRC in pounds sterling. There is no certificate market and no surrender mechanism.
What are the UK CBAM reporting requirements?
For each accounting period, the liable person must submit a CBAM return to HMRC, including per consignment:
- the relevant 8-digit commodity code
- the net weight of the goods in kilograms, excluding packaging
- the emissions intensity in tCO₂e per functional unit (verified actual data or default value)
- embodied emissions in any precursor goods, where these are exempt
- the carbon price incurred in the country of production, in GBP
- the country of origin under non-preferential rules of origin
All supporting records must be retained for six years after the end of the relevant accounting period.
What documentation do you need from your EU suppliers?
To benefit from actual emissions data and claim CPR, UK importers will need:
- a verified emissions intensity figure (tCO₂e per functional unit)
- a verification report issued by an independent verifier accredited under ISO 17029 and ISO 14065
- evidence that the production installation is subject to the EU ETS, on the HMRC template
Without this documentation, UK importers fall back on default values and lose access to Carbon Price Relief.
How can you reduce your UK CBAM bill through Carbon Price Relief?
The EU ETS meets the criteria of a qualifying carbon pricing scheme, so emissions covered by it at the production stage can reduce the UK CBAM liability. To claim CPR, the UK importer must obtain a carbon pricing verification report from the EU installation on the HMRC template, verified by an accredited independent verifier, and convert any foreign-currency amounts into GBP using HMRC exchange rates for the calendar quarter before importation.
The logic is simple: if your supplier provides the evidence, your CBAM bill comes down. If not, you pay the full UK CBAM rate.
How should UK importers prepare for CBAM compliance?
The first return is due on 31 May 2028, but the data trail begins on 1 January 2027. A practical preparation checklist:
- Map your imports: Identify which fall under CBAM commodity codes, by sector and supplier.
- Forecast against the threshold: Assess whether your imports will cross £50,000.
- Engage EU suppliers early: Confirm whether they can provide verified emissions data and EU ETS evidence.
- Update procurement contracts: Introduce CBAM data clauses for emissions and carbon-pricing documentation.
- Decide on actual vs. default: Per supplier and product.
- Build internal processes: Assign responsibility for CBAM scoping, data collection, returns and six-year recordkeeping.
- Coordinate with your customs broker: Align CBAM data flows with existing customs declarations.
Conclusion: Why UK CBAM compliance starts now, not in 2027
The UK CBAM is a structural change in how carbon-intensive imports are taxed at the UK border, affecting landed costs, supplier relationships and procurement contracts long before the first return is filed. The businesses best placed in 2028 will be those that started the data and supplier dialogue in 2026.
As a neutral customs specialist with offices in the United Kingdom and across the EU, Gerlach Customs supports UK importers preparing for CBAM – from scoping your import portfolio against CBAM commodity codes, to coordinating data flows with your EU suppliers, to integrating CBAM into your existing customs processes.
Get in touch with Gerlach Customs to discuss how we can support your UK CBAM preparation.
