UK CBAM: the complete guide for importers

UK CBAM in one sentence: from 1 January 2027, if your business imports more than £50,000 of iron & steel, aluminium, cement, fertiliser or hydrogen products in a rolling 12 months, you must register with HMRC, work out the emissions embodied in those goods, and pay a carbon charge on them — with the first return and payment due by 31 May 2028.

This guide covers the whole regime in plain English. It is written for the people the threshold actually catches — finance and operations at importing SMEs, and the customs brokers who look after them — not for carbon specialists.

Is it definitely happening?

Yes. This is the question we hear most, so let's settle it first.

The UK Carbon Border Adjustment Mechanism is law: it is Part 5 of the Finance Act 2026, which received Royal Assent on 18 March 2026. The start date — imports from 1 January 2027 — is written into the Act itself. The government confirmed the policy at Budget 2025 and has re-committed to the date in every publication since.

Why the UK is doing this

UK manufacturers pay a carbon price under the UK Emissions Trading Scheme (UK ETS). Imports historically haven't. CBAM levels that playing field by charging imported goods a comparable carbon price to the one domestic producers face — so that cutting UK emissions doesn't simply move production (and emissions) offshore. The EU runs a parallel scheme for the same reason; the two work quite differently in practice (see our comparison).

Who gets caught

Three things determine whether UK CBAM is your problem:

1. You are the importer. The liable person is the business named on the customs declaration (or on whose behalf it is made). Not the overseas producer, not your freight forwarder — you. Private individuals importing for non-commercial purposes are exempt.
2. You import covered goods. The goods list is defined by commodity code across five sectors: iron & steel, aluminium, cement, fertilisers and hydrogen. It reaches further downstream than people expect — screws, bolts and fasteners, aluminium doors and structures, nitric acid and ammonia are all on it. Scrap is not. The full sector-by-sector breakdown is here.
3. You cross £50,000. Measured as the customs value of covered goods, on two tests: a rolling 12-month look-back checked on the first day of each month, and a forward-looking test for any 30-day window expected to reach £50,000. Meeting either triggers registration. Full threshold mechanics, with worked examples — or get an instant read with the threshold checker.

The government's own analysis says the £50,000 line keeps over 99% of imported emissions in scope while excluding over 80% of businesses that would otherwise be caught. Put differently: it is deliberately set to catch mid-sized importers, not just multinationals.

How the charge is worked out

The formula is simple to state:

CBAM charge = tonnes of embodied CO₂e × the sectoral CBAM rate − any carbon price relief

Each part has rules attached.

Embodied emissions

The charge covers the direct emissions from producing the good, including emissions embodied in precursor materials further up the chain (the steel in your fasteners, the clinker in your cement, the ammonia in your fertiliser). Indirect emissions — from the electricity used in production — are excluded until 2029 at the earliest, a simplification announced at Budget 2025.

For each import line you will use one of two data sources:

• Actual data from your supplier's installation — an emissions intensity per tonne, measured over a calendar-year monitoring period and independently verified against international standards (ISO/IEC 17029 and ISO 14065) by an accredited verifier. Producers already reporting for EU CBAM will find the UK methodology deliberately similar, though not identical.
• Default values — a government fallback figure per type of good, no supplier data needed. The default values themselves have not yet been published; HMRC has committed to publishing them before the regime starts, and has signalled they will be set so that defaults carry no advantage over real data.

Two rules make this a genuine strategic choice rather than an afterthought. You may use actual data for a final good while using defaults for its precursors — but not the reverse. And once a return is filed using defaults, it cannot be amended later to substitute actual data. Whatever you fail to collect during 2027 stays uncollected, at whatever the default costs you.

The CBAM rate

The rate is set by the government, per sector, per quarter, published at the start of each quarter from January 2027. It is derived from the average UK ETS auction price over the preceding quarter, adjusted downwards to reflect the free allowances UK producers in that sector still receive (an adjustment that shrinks each year as free allocation phases out). One useful marker is coming: the government has said it will publish an illustrative CBAM rate in autumn 2026 — the first hard number importers can put in a budget.

Carbon price relief

If the goods were made somewhere with its own qualifying carbon price — a carbon tax or emissions trading scheme with mandatory participation and a published price — the effective carbon price already paid can be deducted from the UK charge, with independent verification and evidence requirements, capped at the liability itself. Note carefully: there is no blanket exemption for EU-origin goods. The UK and EU are negotiating to link their emissions trading schemes, which could eventually exempt each side's goods, but no agreement is in force — as things stand, EU-origin goods are chargeable like everything else, with relief available for carbon prices actually paid.

Every deadline that matters

The trap in this timeline is that it reads as if nothing happens until 2028. The opposite is true: the return you file in May 2028 is built entirely from data you collect during 2027 — per-line commodity codes, weights, origins, values, and supplier emissions data with its monitoring-period and verification requirements. 2027 is the work; 2028 is just the paperwork.

What to do now — a short list

1. Find out if you're in scope, precisely. Pull a 12-month import report from your customs broker with 8-digit commodity codes, and check it against the covered list. Our threshold checker gives you a fast first answer.
2. Put the dates in the calendar — including "registration opens" (expected late 2026) and the autumn 2026 illustrative rate as a budgeting trigger.
3. Start the supplier conversation. Actual data beats defaults only if you collect it, and 2027 data is collected in 2027. Here is exactly what to ask suppliers for, including an email you can copy.
4. Assign it to someone. In most caught businesses this lands with finance or ops. It is a systems-and-records job, not a sustainability job.
5. Talk to your broker — they see your commodity codes already. (If you are the broker, we should talk.)

What's still to be confirmed

Being straight about the open items, because stale certainty is worse than honest draft-status:

• Final regulations — consulted in draft (February–May 2026), due to be laid later in 2026. Policy intent has been stable, but details can move.
• Default values — framework set; the actual numbers unpublished.
• The rate — mechanism set; first real number due as an autumn 2026 illustration.
• Registration mechanics — via Government Gateway, with your EORI number and estimated import weights per sector; HMRC's detailed guidance and opening date are still to come.
• Penalty amounts — HMRC's existing penalty regimes will apply, with specifics to be confirmed.
• UK–EU ETS linkage — under negotiation; would eventually change the treatment of EU-origin goods. Not in force.

We track all of these against primary sources and update this guide (the review date at the top tells you when it was last checked).

Sources

• Finance Act 2026, Part 5 and Schedules 16–19 — the primary legislation
• HMRC: CBAM policy summary (April 2026)
• HMRC: CBAM factsheet (November 2025)
• gov.uk CBAM collection page — where new publications land
• Draft CBAM regulations consultations (February and April 2026)