The UK CBAM: A Guide for Businesses Ahead of 2027

The UK is introducing its own Carbon Border Adjustment Mechanism (CBAM), which comes into force on 1 January 2027. It will put a carbon price on certain imported goods. As with the EU's version, it affects two groups: the businesses that import these goods into the UK, who carry the charge, and the suppliers across the supply chain who will be asked for emissions data. The start date may feel some way off, but the data behind it takes time to line up. Here is what the UK CBAM is, who it affects, and why it is worth understanding now.

The UK CBAM in brief

The UK CBAM places a carbon price on the emissions embodied in certain imported goods, so that carbon-intensive products coming into the UK face a comparable carbon cost to goods made by UK manufacturers.

The reasoning is straightforward. The UK already prices carbon for domestic producers through the UK Emissions Trading Scheme (UK ETS). Without a border measure, businesses could import high-carbon goods from countries with weaker carbon pricing, which would mean UK climate efforts simply displaced emissions overseas rather than cutting them. CBAM is designed to close that gap.

When does it start?

The UK CBAM commences on 1 January 2027.

The legal framework is being put in place in stages. The core rules were set through primary legislation in the Finance Act 2026, with the finer detail following in secondary legislation and supporting notices that moved through technical consultation during 2026. Some specifics, including the default emissions values and illustrative tax rates, are due to be published by the government ahead of the start date.

A few key dates worth noting:

• The first accounting period runs for a full 12 months, from 1 January to 31 December 2027.
• The first returns and payments are due by 31 May 2028, five months after that period ends.
• Businesses that become liable in the first year have until 31 January 2028 to register.
• From 1 January 2028, reporting moves to a quarterly cycle.

Which goods and businesses are covered?

The UK CBAM applies to specified goods in five sectors:

• Aluminium
• Cement
• Fertiliser
• Hydrogen
• Iron and steel

Within those sectors, only specific products are in scope, identified by their commodity codes. A small number are excluded, including scrap aluminium and scrap iron and steel.

The person liable for the charge is the importer, meaning the business in whose name the goods are declared at the UK border. Goods of UK origin are not in scope, and nor are goods imported by private individuals for non-commercial use.

There is also a threshold. A business only needs to register for CBAM once the value of the in-scope goods it imports meets or exceeds £50,000, measured either over a rolling 12-month look-back or an expected 30-day look-ahead. Below that, no registration is required.

How the charge is worked out

At its simplest, the CBAM charge is the embodied emissions of the imported goods multiplied by the CBAM rate. From that, businesses can subtract Carbon Price Relief, which is the value of any carbon price already paid on those emissions abroad, to avoid being charged twice. The result is the final CBAM liability.

The CBAM rate reflects the UK's effective carbon price, set with reference to the UK ETS, with a single rate per sector published each quarter. There are two ways to determine the embodied emissions of an imported good:

• Actual emissions data from the producer, expressed as an emissions intensity per unit and independently verified to recognised standards. This has to be obtained from the supply chain.
• Default values published by the government, used where actual verified data is not available.

Why suppliers will be asked for carbon data

Like the EU scheme, the UK CBAM reaches well beyond the importers it directly regulates.

To work out the charge, a UK importer can use the producer's actual verified emissions data, or fall back on government default values. The government prefers actual data, and for most importers the deciding factor will be cost. In the EU, defaults are set deliberately high, which makes actual supplier data the cheaper option. The UK has not confirmed its own approach yet, but has signalled it is minded to follow the EU's lead, with final details due in secondary legislation later in 2026.

Either way, that verified data can only come from the producers and suppliers who made the goods. So if you supply any of these goods, or the materials in them, into the UK, expect emissions data requests to become routine, and expect suppliers who can provide credible data to have an edge over those who cannot.

One more point: verified data has to be tied to a producer's monitoring period and signed off by an accredited verifier, and the first monitoring period that matters begins on 1 January 2027. Lining that up takes time, so starting early is worth it.

How does the UK CBAM differ from the EU CBAM?

The EU has its own CBAM, which moved into its definitive, charging phase on 1 January 2026, a year ahead of the UK. The two schemes share the same core logic, but they are not identical. The EU version covers six sectors, including electricity, whereas the UK scheme covers five and does not include it. The thresholds, rates and timelines also differ.

The UK has deliberately designed its emissions monitoring and verification methodologies to work alongside the EU's, with the aim of reducing duplicated effort for businesses caught by both. If you trade in-scope goods across both markets, that alignment is worth keeping in mind, but the two schemes still need to be handled separately.

The bottom line

The UK CBAM starts on 1 January 2027 and will price the carbon embodied in imports of aluminium, cement, fertiliser, hydrogen, and iron and steel. The charge falls on UK importers above a £50,000 threshold, but the verified emissions data it depends on has to come from producers across the supply chain.

The businesses that prepare early, by understanding which of their goods are in scope and getting reliable emissions data in place, will find the transition far smoother than those that wait until 2027 to begin. Strong, product-level carbon data is the foundation for all of it.

Frequently asked questions

When does the UK CBAM start?

The UK CBAM comes into force on 1 January 2027. The first accounting period runs to 31 December 2027, with the first returns and payments due by 31 May 2028.

Which goods does the UK CBAM cover?

It covers specified goods in five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. Goods are identified by commodity code, and a few are excluded, such as scrap aluminium and scrap iron and steel.

Who is liable, and is there a threshold?

The importer of the goods is liable, meaning the business in whose name the goods are declared at the UK border. A business only needs to register once the value of the in-scope goods it imports reaches £50,000, assessed over a rolling 12-month period or an expected 30-day period. Goods of UK origin, and goods imported by private individuals for non-commercial use, are not in scope.

Will my business be asked for emissions data even if I'm not the one paying CBAM?

Quite possibly. UK importers can lower their CBAM bill by using suppliers' actual verified emissions data instead of default values, so they are likely to ask the producers and suppliers in their chain to provide it. If you supply in-scope goods, or the materials in them, into the UK, it is worth being ready for those requests.

How is the CBAM charge calculated?

The charge is the embodied emissions of the imported goods multiplied by the CBAM rate, minus any Carbon Price Relief for a carbon price already paid abroad. Emissions can be based on actual verified data from the producer, or on government default values where actual data is not available.

How is the UK CBAM different from the EU CBAM?

Both schemes price the carbon embodied in imports, but they are separate. The EU CBAM began charging on 1 January 2026 and covers six sectors including electricity. The UK CBAM starts on 1 January 2027 and covers five sectors, without electricity. The UK has designed its methodologies to align with the EU's where possible, to reduce duplicated work for businesses subject to both.

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