UK CBAM starts in January. Here’s what importers need to know

From 1 January 2027, certain goods imported into the UK will attract a new carbon charge. It’s called the Carbon Border Adjustment Mechanism, or UK CBAM, and if you import steel, aluminium, cement, fertiliser or hydrogen, it’s worth a look before the year runs out.

The thinking behind it is simple enough. UK manufacturers pay for their carbon through the UK Emissions Trading Scheme, while producers elsewhere may pay a lower price, or nothing at all. CBAM is meant to narrow that gap, so that making something somewhere with weaker carbon pricing stops being a cost advantage in itself.

The government has the legislative framework in place now, with further guidance and the default emissions values still to come. There’s enough on the table to start preparing, and the first job is the one nobody enjoys: working out what you actually import.

Which goods are covered by UK CBAM?

UK CBAM covers specified goods across five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel.

The word doing the work there is specified. Coverage runs off commodity codes, not off whether you think of yourself as a steel importer or a construction supplier. Certain manufactured articles are in, including some steel structures, screws, bolts and nuts, while other products containing steel sit outside it entirely.

So start with the codes on your customs declarations and check them against the CBAM list. It isn’t glamorous, but it beats guessing from a product description and finding out in March.

And if you already have EU CBAM processes running, check the UK rules separately rather than assuming they carry over. The two schemes differ on coverage, thresholds and administration, so an existing EU process needs a proper look before you point it at this one.

How does the £50,000 threshold work?

The registration threshold is £50,000 of covered goods, valued using customs valuation rules, and there are two tests:

• On the first day of each month, check whether covered imports reached £50,000 over the preceding 12 months.
• On any day, consider whether you expect to import £50,000 or more of covered goods within the next 30 days.

Only imports from 1 January 2027 count, so in that first year the backward-looking check simply runs back to the start.

Fifty thousand pounds isn’t a lot of steel. A single substantial shipment could trip the forward-looking test even if you only import these goods now and then, and a run of smaller ones can get you there across the year without anyone particularly noticing.

If you’re under the threshold, keep the records and keep checking. Being below it today doesn’t settle the question for the rest of the year.

How is the carbon charge calculated?

It starts with the emissions from making the goods. At launch, UK CBAM covers direct production emissions, including those in the relevant materials that went into the final product. Indirect emissions from electricity generation are out until 2029 at the earliest.

There are two ways to land on a figure.

The first is to use the government’s default values for the goods you import. You don’t need verified production emissions from your supplier, though you do still need accurate import and weight records. The values themselves are due before the scheme starts.

The second is to get actual emissions data from the factory or installation that made the goods, independently verified under the UK CBAM requirements. That one depends on your supplier providing both the data and the verification evidence.

Either way, the emissions intensity is multiplied by the weight you imported to give the embodied emissions, and those are multiplied by the CBAM rate, with any eligible carbon price relief taken off.

The rate isn’t fixed. It will be set quarterly for each sector, reflecting UK ETS prices and the free allowances available to UK producers, so it moves with the market rather than sitting at a number you can plan around indefinitely.

Verified data can bring the charge down if your supplier is cleaner than the default assumes, which makes that conversation worth having. Whether it pays off depends on the figures and on what verification costs.

What if carbon has already been priced overseas?

Carbon Price Relief can reduce what you owe here if the same emissions have already been through a qualifying carbon pricing scheme somewhere else.

The evidence is the whole thing. You’ll need a completed carbon pricing verification form from your supplier or the producing installation, prepared by an appropriate independent verifier. Without it, the relief is sitting there and you can’t reach it.

Worth asking about at the same time as the emissions data, rather than going looking for it afterwards.

The dates to put in your diary

UK CBAM starts on 1 January 2027, but the money comes later:

• The first accounting period runs from 1 January to 31 December 2027.
• Businesses becoming liable during 2027 have until 31 January 2028 to register.
• The first return and payment are due by 31 May 2028.
• Accounting periods become quarterly from January 2028.

Which sounds like plenty of room, and in one sense it is. The catch is that the records have to start in January 2027 regardless, because nobody reconstructs a year of imports in 2028 from memory and a pile of invoices. Records generally need keeping for six years from the later of when they were created or the end of the accounting period they relate to.

One thing that makes it more manageable than it first looks: verified emissions data relates to production monitoring periods, so you aren’t measuring emissions per delivery. If you go the actual emissions route, the job is connecting the producer’s verified figures to the right imports when the return comes round.

What to do before January

Start with your commodity codes and your expected import values. Once you know what’s covered, decide who is watching the threshold and keeping the records, because someone needs to own it.

Then talk to your suppliers. Can they provide the verified emissions data and evidence of any qualifying carbon price, when would it be available, and is there a cost? Their answer decides which route you take.

Work out where all of it is going to live, sitting alongside the customs declarations, weights and import values. Sorting that out now makes the first return a good deal less painful.

And go through your purchasing terms. Establish who carries the cost and who supplies the information, because contracts can share the cost between the parties but the person classed as the importer still answers to HMRC. Better to settle that in October than in January with the goods already on the water.

How Green Leaves Logistics can help

We can help with the customs documentation and classifications your import records rest on. My GL gives you sight of your shipments, documents and customs declarations in one place, which keeps that side of it findable when you need it.

Our carbon management service is a different thing, and worth being clear about. It covers the estimated emissions from moving your goods, whereas CBAM is about the emissions from making them. Different numbers, different sources. For the return itself, your accountant or a CBAM specialist is the right call.

If you think your imports might be caught by this, get in touch and we’ll talk through the customs side and the records you’ll want. It’s a better conversation to have now than in the new year.