UK confirms carbon border mechanism (CBAM) for January 2027

The UK CBAM will tax the carbon emissions embedded in imported goods in the aluminium, cement, fertiliser, hydrogen, iron and steel sectors, to align their carbon cost with that borne by UK producers subject to the domestic carbon market (UK ETS). The 30 October 2024 document sets out the principle: the charge is due when goods enter free circulation in the UK, and its rate depends on actual declared emissions or, failing that, default values.

The government raised the mandatory registration threshold: anyone responsible for CBAM goods worth more than £50,000 over a rolling twelve-month period will need to register with HMRC as a CBAM taxpayer, submit quarterly returns on quantities and embedded emissions, and pay the tax due. This threshold, raised from the £10,000 initially proposed, excludes more than 80% of potentially affected businesses while covering more than 99% of the targeted emissions, according to the government's own estimates.

The first reporting period will run to 31 December 2027, with a first payment expected by 31 May 2028. In the meantime, HMRC must publish primary and secondary legislation, along with a communications plan and detailed guidance for both taxpayers and overseas operators. No final list of tariff codes beyond Annex B of the October 2024 document had been made public as of 27 September 2026.

All UK importers of finished or semi-finished aluminium, steel, cement, fertiliser or hydrogen products exceeding the £50,000 threshold over a rolling twelve months are affected, whatever the origin of the goods. A Chinese exporter or factory has no direct obligation to HMRC: it is the UK importer, the person responsible for the goods when they enter free circulation, who is liable for the UK CBAM.