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UK CBAM FAQs:

What Importers Need to Know Ahead of 2027

The UK Carbon Border Adjustment Mechanism (UK CBAM) is a new carbon border tax on certain imported goods. It starts on 1 January 2027 and will affect UK importers of iron and steel, aluminium, cement, fertilisers and hydrogen. These UK CBAM FAQs cover the key questions businesses are asking, with clear, practical answers based on official UK government policy and legislation.

  1. What is UK CBAM?
  2. Who needs to comply with UK CBAM?
  3. Which goods are covered by UK CBAM?
  4. When does UK CBAM start?
  5. What is the £50,000 UK CBAM threshold?
  6. How does UK CBAM work?
  7. How is the UK CBAM charge calculated?
  8. How are embedded emissions calculated?
  9. What emissions data do importers need?
  10. How do UK CBAM reporting requirements work?
  11. When do UK CBAM returns need to be filed?
  12. What should importers do to prepare for UK CBAM?
  13. Are there any exemptions from UK CBAM?
  14. Will importers need to buy or surrender UK CBAM certificates?
  15. What are the responsibilities of the importer under UK CBAM?
  16. What is the difference between UK CBAM and EU CBAM?
  17. What supplier data and systems will importers need for UK CBAM?
  18. UK CBAM support.

1. UK CBAM basics

1. What is the UK CBAM?

The UK CBAM is a Carbon Border Adjustment Mechanism that places a carbon price on certain carbon-intensive goods imported into the UK. Its aim is to ensure imported products face a similar carbon cost to goods produced in the UK under the UK Emissions Trading Scheme (UK ETS), reducing the risk of “carbon leakage”.

The legal basis is in the Finance Act 2026 and secondary CBAM regulations, with the mechanism applying to goods imported on or after 1 January 2027.

2. Does CBAM apply to the UK?

Yes. The UK is introducing its own CBAM, separate from the EU scheme. It applies to imports of specified goods into the UK (Great Britain and Northern Ireland), including from Crown Dependencies, Overseas Territories and the UK Continental Shelf.

It does not apply to goods moving within the UK domestic market.

3. Which goods are in scope of the CBAM?

At launch, UK CBAM covers specified goods in five sectors: iron and steel, aluminium, cement, fertilisers and hydrogen.

If a product is in scope depends on its commodity (customs) code. The definitive list of in-scope commodity codes is published by the UK government, so you should check this list to confirm if your products are covered.

Electricity and other sectors such as glass and ceramics were consulted on but are not in the initial 2027 scope.

4. When does the UK CBAM come into effect?

UK CBAM applies to goods imported into the UK on or after 1 January 2027.

  • The first accounting period covers imports from January to December 2027.
  • The first CBAM return and payment for that period are due by 31 May 2028.
  • After the first 12-month period, the regime moves to quarterly accounting periods and returns, generally due two months after the end of each period.

There is no transitional reporting phase for the UK, unlike the EU’s 2023–2025 reporting-only period.

UK CBAM FAQs

2. Thresholds, charges and emissions

This section of the UK CBAM FAQs explains who needs to register and how the threshold works.

5. Who needs to register for UK CBAM and what is the threshold?

The obligation falls on the UK importer, meaning the entity responsible for the customs import declaration.

You must register for UK CBAM if, over a rolling 12-month period, the total value of CBAM-scope goods you import into the UK exceeds £50,000. You must also register if you expect your imports of CBAM goods to exceed £50,000 in the next 30 days.

Below this threshold, you are not required to register, report or pay UK CBAM on those imports. This is a value-based threshold, unlike the EU’s mass-based (tonnage) threshold.

Once registered, the importer is responsible for submitting CBAM returns, calculating the CBAM charge, paying HMRC and keeping records.

6. How does the UK CBAM work?

UK CBAM works as an import charge on the embedded emissions in covered goods.

In practice:

  • You identify which imported products are in scope by commodity code.
  • For each import, you determine the embedded emissions in tonnes of CO₂ equivalent using either actual, verified producer data or UK default values where allowed.
  • You calculate the CBAM charge based on the UK carbon price and any eligible carbon price relief for carbon prices already paid abroad.
  • You report this in your CBAM return and pay HMRC.

The mechanism mirrors the logic of the UK ETS so that imported goods face a similar carbon cost to UK-produced goods.

7. How is the UK CBAM charge calculated?

The CBAM charge is calculated by multiplying the UK carbon price by the embedded emissions in imported goods, then reducing this amount by any eligible carbon price relief.

  • UK carbon price: derived from the UK ETS allowance price, as set out in the CBAM regulations.
  • Embedded emissions: the tonnes of CO₂ equivalent associated with the imported goods, calculated according to UK methodologies and system boundaries.
  • Carbon price relief: applies where the goods have already been subject to a qualifying carbon price in the country of production, such as certain foreign emissions trading schemes or carbon taxes, subject to the official list of qualifying schemes.

Exact formulas, default values and system boundaries are defined in the secondary legislation and accompanying guidance.

8. What emissions do I need to report?

The initial UK CBAM regime focuses on direct emissions from the production of CBAM goods.

This contrasts with the EU scheme, which also includes some indirect emissions, notably for cement and fertilisers.

In practice, you will need to report:

  • The quantity of goods imported by commodity code.
  • The embedded direct emissions in tonnes of CO₂ equivalent.

You must be able to support the emissions figures with evidence as required by HMRC guidance. Your data model should align with UK and EU CBAM requirements to avoid double work.

3. Reporting and compliance

These UK CBAM FAQs cover the reporting process and what importers need to prepare.

9. How do I report emissions under UK CBAM?

Once registered, UK importers must submit CBAM returns to HMRC covering each accounting period. In these returns you declare:

  • Quantities of CBAM goods imported.
  • Embedded direct emissions.
  • Any applicable carbon price relief.
  • The resulting CBAM charge due.

Reporting will be via HMRC’s digital CBAM service. You should plan to integrate customs, procurement and sustainability data so you can populate returns without manual re-keying.

10. How do I file a UK CBAM return?

To file a UK CBAM return:

  • Log in to HMRC’s CBAM digital service using your registered account.
  • Select the relevant accounting period (first period is Jan–Dec 2027; later periods are quarterly).
  • Enter or upload data on quantities, embedded emissions, carbon price relief and the resulting CBAM charge.
  • Submit the return and pay the amount due by the deadline.

The first annual return and payment are due by 31 May 2028. Later returns are due quarterly. You must keep all supporting records and evidence in case of HMRC checks or audits.

11. How do I become CBAM compliant?

The following steps address the main areas covered by these UK CBAM FAQs.

A practical compliance roadmap looks like this.

1. Screen your portfolio

  • Map all imported goods to commodity codes.
  • Flag those in the five CBAM sectors using the official list.

2. Assess your exposure

  • Calculate the annual value of CBAM-scope imports.
  • Check if you exceed the £50,000 threshold.

3. Engage your suppliers

  • Request embedded emissions data and verification evidence from producers.
  • Align data templates with UK and EU CBAM requirements to avoid double work.

4. Set up internal processes

  • Define who owns CBAM data, calculations and filings across trade, tax, sustainability and finance.
  • Integrate data into your customs, ERP or CRM systems where possible.

5. Register and file

  • Register with HMRC ahead of 2027 if you expect to exceed the threshold.
  • Prepare for the first return covering 2027 imports, due by 31 May 2028, then quarterly thereafter.

6. Monitor regulatory updates

  • Track HMRC and UK government guidance for changes to methodology, thresholds or qualifying carbon pricing schemes.

12. Are there exemptions from UK CBAM?

Yes. Key exemptions and reliefs include:

  • Small importers below the £50,000 threshold.
  • UK-origin goods returning to the UK.
  • Non-business imports and goods under full customs temporary admission relief.

Carbon price relief is available where a qualifying carbon price has already been paid in the exporting jurisdiction, such as certain foreign emissions trading schemes or carbon taxes, subject to proof and the official list of qualifying schemes.

The exact scope of exemptions must be checked against the official guidance and legislation.

13. What are my responsibilities as a UK CBAM importer?

As a UK CBAM importer you are responsible for:

  • Determining if your imports are in scope and if you exceed the £50,000 threshold.
  • Registering for UK CBAM when required.
  • Collecting embedded emissions data from producers and suppliers.
  • Calculating the CBAM charge, filing returns and paying HMRC.
  • Maintaining records and evidence for inspections or audits.

The legal obligation sits with the importer, even if you use a customs agent or third party to help with filings.

14. How should I prepare my suppliers and data systems for CBAM?

To prepare your supply chain and systems:

1. Identify in-scope goods

  • Use the official commodity code list to flag CBAM goods in your import portfolio.

2. Map your suppliers

  • Group suppliers by product and country.
  • Highlight those in CBAM sectors.

3. Request emissions data

  • Ask producers for direct emissions, methodology and verification status.
  • Agree data formats that work for both UK and EU CBAM.

4. Update internal systems

  • Configure ERP, customs and sustainability tools to capture quantities, embedded emissions, carbon price relief evidence and accounting period data.

5. Define roles and workflows

  • Decide who collects data, who checks it, and who files returns and pays HMRC.

6. Run a dry-run

  • Use 2026 import data to estimate your 2027 CBAM exposure.
  • Test your reporting process before the first return is due.

4. UK CBAM and EU CBAM

The final section of these UK CBAM FAQs compares the UK and EU approaches.

15. What are UK CBAM certificates?

Publicly available official guidance does not describe a UK CBAM “certificate” system in the same way as the EU scheme. The UK legislation frames CBAM as a charge on embedded emissions that is calculated, reported and paid to HMRC through a CBAM return, rather than through the purchase and surrender of separate certificates.

For that reason, you should treat UK CBAM primarily as a carbon border tax return and payment obligation, and rely on official HMRC guidance for the exact process once it is fully published.

16. Do I need to buy UK CBAM certificates?

Based on current official information, you do not need to buy or surrender separate UK CBAM certificates. The UK legislation sets out a charge on embedded emissions that is calculated, reported and paid to HMRC through a CBAM return.

In practice, as a registered UK importer you:

  • Calculate the CBAM charge on your imports.
  • Declare it in your CBAM return.
  • Pay the amount due to HMRC by the deadline.

The process is closer to a carbon tax return than to purchasing and surrendering allowances or certificates.

17. What is the difference between UK CBAM and EU CBAM?

Key differences:

Start date

  • EU CBAM: transitional reporting from October 2023; financial phase from 1 January 2026.
  • UK CBAM: starts 1 January 2027 with no transitional reporting phase.

Sectors covered

  • EU: iron and steel, aluminium, cement, fertilisers, hydrogen and traded electricity.
  • UK: iron and steel, aluminium, cement, fertilisers and hydrogen (electricity not in the initial 2027 scope).

Threshold

  • EU: 50 tonnes per year (mass-based, for some sectors).
  • UK: £50,000 over a rolling 12-month period (value-based).

Compliance model

  • EU: authorised CBAM declarants submit an annual declaration and surrender CBAM certificates.
  • UK: registered UK importers submit CBAM tax returns and pay HMRC, with no separate certificate surrender described in the primary legislation.

Emissions scope

  • EU: direct and some indirect emissions (e.g. cement, fertilisers).
  • UK: direct emissions only (initially).

Geographic scope

  • EU: imports into the EU.
  • UK: imports into the UK, including Great Britain and Northern Ireland.

Need UK CBAM support?

At Carbon Complete, we provide practical UK CBAM services tailored to your imports and supply chain:

  • UK CBAM Training
  • UK CBAM Reporting Support
  • UK CBAM Data and Systems
  • UK CBAM Risk Assessment
  • Customs and UK CBAM Integration

Get in touch

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