The UK Carbon Border Adjustment Mechanism (CBAM) is one of the most significant trade policy developments since Brexit. Starting 1 January 2027, it will impose a carbon cost on imports of carbon-intensive goods — reshaping supply chains and compliance obligations for thousands of UK importers.

What is UK CBAM?

CBAM is designed to ensure that imported goods face a carbon price equivalent to what UK producers pay under the UK Emissions Trading Scheme (UK ETS). Without such a mechanism, domestic manufacturers subject to carbon pricing would be undercut by overseas competitors operating in countries with weaker climate regulations — a phenomenon known as carbon leakage.

The UK CBAM mirrors, but is distinct from, the EU CBAM which began its transitional phase in October 2023. UK businesses trading with both markets will need to understand both frameworks to maintain compliance.

Sectors in Scope

Following extensive government consultation, the following sectors fall within UK CBAM from 1 January 2027:

• Aluminium — primary and secondary, including certain fabricated products
• Cement — clinker and finished cement products
• Fertilisers — nitrogen-based, including ammonia and urea
• Hydrogen — electrolytic and other forms
• Iron and Steel — including tubes, pipes and certain downstream products

Importantly, glass and ceramics were removed from the scope following the consultation process — a significant reprieve for importers in those sectors who had anticipated being captured by the regime.

Registration and Thresholds

Not every importer will be required to register. The minimum registration threshold is £50,000 of CBAM goods — but it is not a simple calendar-year total. GOV.UK sets out two tests, both running from 1 January 2027 (imports before that date never count):

• Forward-look: on any given day, ask whether you expect the CBAM goods you will import over the next 30 days to reach £50,000. If yes, you are liable from that day — the day you knew, not the day the goods arrive.
• Backward-look: on the first day of each month, look back over the preceding 12 months. If your CBAM imports in that window reached £50,000, you are liable from the date the threshold was first crossed.

Where both tests apply, the earlier date wins. Registration itself opens on 1 January 2028, and in the first year businesses have until 31 January 2028 to register. After that first year the normal rule bites: 30 days from the day you become liable.

For CBAM compliance support, working with an experienced customs intermediary is strongly recommended — particularly for businesses dealing with multiple product codes across different CBAM sectors.

Reporting and Returns

The CBAM returns schedule is structured as follows:

• First accounting period: 12 months, 1 January – 31 December 2027. Return and payment due 31 May 2028 — five months after the period ends. It is not a quarterly period, which is where most early planning goes wrong.
• Quarterly accounting periods start on 1 January 2028. Published deadlines for that year: Q1 due 31 July 2028, Q2 due 29 September 2028, Q3 due 30 November 2028, Q4 due 28 February 2029.
• Record-keeping: six years after the end of the accounting period the goods are attributed to — not six years from the import date.

CBAM is a tax, not a certificate market: liable persons account for every CBAM good that passes a tax point in the accounting period, then file an online return and pay HMRC. Practically, that means your 2027 imports need to be captured from day one even though nothing is due until 2028 — and even though you cannot register until January of that year. GOV.UK has published a record-keeping guide for the period before registration opens.

Each return must declare the embedded carbon in imported goods, calculated using methodologies to be specified by HMRC. Where actual emissions data is unavailable, default values set by the government will apply — typically at higher rates, incentivising companies to obtain verified data.

Who is actually liable — and why it is not your customs agent

This is the question brokers field most often, and the answer is unambiguous. Where customs duties are due, the liable person is the individual or organisation named on the import declaration — even if a customs broker, freight forwarder or tax agent completes and submits that declaration on their behalf. Where no customs duty is due, it is the person importing the goods, again regardless of who physically handles the paperwork.

Appointing an intermediary therefore does not move the CBAM liability off your books. It moves the execution, not the exposure. The corollary matters for anyone importing through a group structure or a third-party importer of record: check whose EORI and whose name sit on the declaration, because that is the entity HMRC will look to for the CBAM return and the payment.

Businesses of any size are caught, and so are government departments carrying out commercial activity and charities.

Which imports do not count towards the £50,000 threshold

Several categories of import are excluded from the threshold calculation. Missing these is the difference between a business that must register and one that does not:

• Private use — CBAM goods imported for your own private use, such as cement for building your own house, are exempt.
• UK-origin goods — exempt even when released into free circulation.
• Returned Goods Relief — goods re-imported in the same state within three years of export, and Union goods exported from Northern Ireland into the EU and re-imported into the UK.
• Temporary admission — provided the goods received full relief from customs duties.
• Special customs procedures — inward processing, outward processing, authorised use, customs warehousing and freeport customs sites, unless the goods are later discharged into free circulation in the UK with customs duties due.

That last point deserves emphasis for anyone running a warehouse or a freeport site: the exclusion is conditional, not permanent. Discharge to free circulation pulls the value back into the threshold and into the charge. Scrap products within the aluminium and iron and steel sectors are also carved out of scope by commodity code — check the code, not the sector name.

How the CBAM charge is calculated

The charge is the embodied emissions of the imported goods multiplied by the CBAM rate. Two variables, and you have some control over the first one.

Embodied emissions. You can use either actual verified emissions data obtained from your supplier, or the default emissions values published by the government. Default values are the fallback for importers who cannot get verified data — and because they are set conservatively, relying on them will generally cost more than obtaining real figures. That is the deliberate design: it pushes supply-chain data collection upstream. Getting emissions data written into supplier contracts during 2026 is the single highest-leverage preparation step available.

The CBAM rate. It is set annually per tonne of embodied emissions, benchmarked against the carbon price UK producers actually face under the UK Emissions Trading Scheme, and reduced by a free allocation adjustment. That adjustment uses a sectoral average of emissions covered by free allowances over a baseline period, tapered each year by a reduction factor as free allowances are phased out under the UK ETS. In plain terms: the rate is designed to track the domestic carbon price and to rise as UK free allocations shrink.

Carbon Price Relief. Where the same goods have already borne a qualifying overseas carbon price, relief reduces the UK liability — capped so that total relief can never exceed the CBAM liability due. Evidence of the overseas charge sits with you, which is another reason to start the supplier conversation early.

Preparing Your Business for 2027

The window between now and January 2027 is critical. Businesses should take the following steps immediately:

• Audit your import portfolio against the published in-scope commodity codes — by code, not by sector description.
• Confirm whose name goes on the import declaration for every CBAM consignment; that entity carries the liability.
• Strip out the excluded flows (private use, UK origin, Returned Goods Relief, temporary admission with full relief, goods still under a special procedure) before you test the threshold.
• Run both threshold tests — the 30-day forward-look and the monthly 12-month backward-look — rather than a single year-end total.
• Get embodied emissions data into supplier contracts now; default values are the expensive fallback.
• Identify any qualifying overseas carbon price already paid, and the evidence to support a Carbon Price Relief claim.
• Review your IT and ERP systems for CBAM reporting capability, and start capturing 2027 imports from 1 January 2027 — registration does not open until 1 January 2028.
• Consider engaging a specialist adviser for CBAM registration help.

Government Source

Sources (gov.uk): Carbon border adjustment mechanism (CBAM): policy summary; Work out the date you’ll need to register for CBAM; Imported CBAM goods that may not contribute towards the registration threshold; Check if you’re classed as the importer for CBAM; Factsheet: carbon border adjustment mechanism. Checked 19 August 2026. HMRC has said further detailed guidance will follow ahead of 2027 — verify figures on GOV.UK before acting.