Every few weeks since the spring our compliance desk gets a version of the same call from an importer moving steel sections, aluminium extrusions, or fertiliser into Great Britain: "the EU carbon border thing already hit us in January, is there a separate British one, and when." There is, it starts on 1 January 2027, and it is close enough now that 2026 is the year to prepare rather than the year to wait. GetTransport.com books freight on lanes that feed UK importers, so this is the operational read on what a booking desk and a compliance team should have in motion this year, not a legal opinion on the mechanism itself.
The UK Carbon Border Adjustment Mechanism puts a carbon charge on certain imported goods whose production is emissions-intensive, so that a tonne of imported steel carries a comparable carbon cost to a tonne made under the UK Emissions Trading Scheme. According to the government's CBAM policy summary published on GOV.UK, the charge applies from 1 January 2027 with no transitional, report-only phase first. That is the single most important difference from the EU regime, which ran a two-year reporting warm-up before it started charging. UK importers do not get that runway.
Which goods are actually in scope
UK CBAM covers five sectors judged most exposed to carbon leakage: aluminium, cement, fertiliser, hydrogen, and iron and steel. Glass and ceramics were considered during the 2024 consultation and left out, on the basis that they are less emissions-intensive and less exposed to leakage, though the government has said they could be added later. Electricity is also outside the UK scheme, which is a genuine divergence from the EU, where imported electricity is covered. If a commodity code in your import book sits inside one of those five groups, CBAM is a condition of the import, not an optional line on the customs entry.
Two details catch importers out. First, the charge reaches complex goods that contain in-scope materials as inputs, not just raw slabs and ingots, so a fabricated steel product can pull emissions from its precursor steel into the calculation. The House of Commons Library research briefing on CBAM flags a UK-specific point here: the UK counts all embedded precursor emissions in a CBAM good, whereas the EU only counts a precursor where its rules explicitly name it. Second, at launch the scheme measures only direct emissions from the production process. Indirect emissions from the electricity a mill or smelter consumes are deferred, and the GOV.UK factsheet puts that no earlier than 2029. If you read an early consultation summary that said indirect emissions were in from day one, it has been superseded.
How the charge is calculated
The arithmetic is simpler than the EU's certificate market. Your liability is the embodied emissions of the imported goods, expressed in tonnes of CO2 equivalent per functional unit, multiplied by a sector CBAM rate, minus any Carbon Price Relief for a carbon price you already paid abroad. There are no certificates to buy and surrender. You calculate the liability, file a return with HMRC, and pay.
The CBAM rate is where importers need to build a small internal process. It is sector-specific and, according to the International Carbon Action Partnership's summary of the UK design, set each quarter with reference to the UK ETS auction price, then adjusted to reflect the share of emissions still covered by free allowances in that sector. The draft Calculation Regulations 2026 add an annual reduction factor that tracks the phase-out of those free allowances, so the effective rate climbs over time even if the underlying carbon price holds steady. Practically, that means you cannot set a single CBAM cost assumption in a 2027 contract and leave it: the rate moves quarterly, and the trajectory is upward.
On the emissions figure itself, you have two routes. You can use verified actual emissions data, which has to be production-specific and independently verified by an accredited third party, covering both the good and its precursors. Or you fall back to a government default value, a single figure per product that GOV.UK says applies for the initial 2027 to 2030 window with any change reviewed from 2031 at the earliest. The default is not a soft option. Where your supply chain is genuinely cleaner than the product average, a default value can overstate your emissions and inflate the bill, which is exactly why the data-collection work below matters.
The £50,000 threshold and who is liable
You only enter the regime once your in-scope imports cross £50,000, and the policy summary sets two tests for that. There is a forward-looking test, where on any given day you expect the value of CBAM goods passing the tax point over the next 30 days to reach £50,000, and a look-back test run on the first day of each month across the preceding rolling 12 months. The threshold was lifted from an originally proposed £10,000, and HMRC's own estimate is that £50,000 removes more than 80% of otherwise-affected importers while still capturing roughly 99% of the embodied emissions that matter. Smaller importers benefit, but anyone with steady industrial-input volumes will clear it quickly.
The liable person is the importer, meaning the party named on the customs declaration bringing the goods into the UK. That makes your Incoterms a CBAM question, not just a freight-cost one. Under a delivered-duty-paid sale the overseas seller may sit as importer of record and carry the CBAM obligation, while under most other terms the UK buyer becomes liable the moment the goods enter. We walk through that allocation in our DDP versus DAP breakdown, and it is worth pinning down in the contract before the first 2027 shipment rather than after HMRC asks who is filing. Connected companies can also apply for group treatment, where one representative member, which must be UK resident or hold a UK permanent establishment, registers and pays for the group. That structure is a 2026 decision, not a 2028 scramble.
The 2026 prep playbook
From a compliance desk's seat, the work that has to happen this year is mostly upstream of the first return. The sequence we are running with importers looks like this:
- Screen the full import portfolio by commodity code against the five sectors, including complex goods that carry in-scope precursors, and quantify how much value sits in scope.
- Run the £50,000 rolling-12-month and 30-day forward tests now, so you know whether and roughly when you cross into liability.
- Start supplier emissions data collection immediately, because it is the longest-lead task. Reach the person responsible for emissions data at the production installation, not the sales contact, and issue a structured template aligned to the EU CBAM data format so suppliers who already report for the EU can reuse it.
- Confirm the liable person on each lane against your Incoterms and customs-declaration setup, and decide whether group registration fits.
- Stand up record-keeping for volumes, values, embodied emissions, and evidence of any overseas carbon price paid, and build a way to ingest the quarterly published rate and budget for the first payment.
The one task that genuinely cannot be left late is supplier data. Verified installation-level emissions figures take months to source, and every supplier who cannot provide them pushes you onto a default value. Our related walkthrough of freight emissions accounting under ISO 14083 covers the transport side of the same data discipline, and the muscle is similar: you cannot reconstruct emissions data after the fact, so it has to be a condition of the purchase, not a document chased during transit.
UK CBAM versus EU CBAM: what a dual-market importer must not confuse
Plenty of importers ship into both markets and assume the two schemes are the same tool with a different flag. They are not. If your team already handles the EU regime, which we cover in our EU CBAM importer guide, these are the differences that change what you actually do:
| Dimension | UK CBAM | EU CBAM |
|---|---|---|
| Charging starts | 1 January 2027, no report-only phase | Definitive charging from 1 January 2026, after a 2023 to 2025 reporting phase |
| Sectors | Aluminium, cement, fertiliser, hydrogen, iron and steel | Same five plus electricity |
| Threshold | £50,000 of imports, rolling 12 months, value-based | 50 tonnes per importer per year, mass-based |
| Mechanism | Tax paid to HMRC, no certificates | Buy and surrender CBAM certificates priced off the EU ETS |
| Indirect emissions | Deferred to 2029 at the earliest | Included for cement and fertiliser in the definitive phase |
| Precursors | All embedded precursor emissions counted | Counted only where the rules explicitly specify |
One number worth correcting, because it circulates in older write-ups: the EU no longer uses a 150-euro-per-consignment de minimis. Under the Omnibus Regulation (EU) 2025/2083 that was replaced with a 50-tonne-per-importer annual mass threshold effective in 2026. So the two thresholds are not comparable line for line, one is a value test and the other is a weight test, and reporting the EU cut-off as a small per-parcel figure will send an importer to the wrong conclusion about whether they are caught.
Where the timeline actually bites
The dates that matter for planning are close together. The charge runs from 1 January 2027, the first accounting period is the full 2027 calendar year, and the first return and payment to HMRC are due by 31 May 2028. After that the scheme moves to quarterly accounting periods. The government also kept refining the mechanics well into 2026: a second draft of the secondary legislation was published on 9 April 2026 with its technical consultation closing on 21 May 2026, covering the calculation of the rate, carbon price relief, and the emissions and verification rules. For an importer, the takeaway is that the first bill lands in mid-2028 but is built entirely from data you have to be collecting across 2026 and 2027, which is why the preparation is a this-year job.
Frequently asked questions
When does UK CBAM start, and is there a reporting-only phase like the EU had?
UK CBAM starts charging on 1 January 2027, and there is no transitional reporting-only phase. According to the GOV.UK policy summary, the first accounting period is the whole of 2027, with the first return and payment due by 31 May 2028. That is a deliberate contrast with the EU, which ran a report-only transitional phase from October 2023 before charging from January 2026.
Which products are covered?
Five sectors are in scope: aluminium, cement, fertiliser, hydrogen, and iron and steel. Glass, ceramics, and electricity are excluded at launch, though glass and ceramics may be added later. Complex goods that contain in-scope precursor materials are also caught, and the UK counts all embedded precursor emissions, which is broader than the EU approach.
Do we have to register if our imports are small?
Only once in-scope imports reach £50,000, measured either as an expected 30-day total or across a rolling 12 months. HMRC estimates this threshold removes over 80% of otherwise-affected importers while still covering about 99% of embodied emissions, so occasional low-volume importers may stay out, but anyone with regular industrial-input flows will cross it.
Should we use default emissions values to keep it simple?
Only as a fallback. A government default value is a single figure per product for 2027 to 2030, and where your supply chain is cleaner than the product average it can overstate your emissions and raise your bill. Verified actual data from the production installation, independently checked by an accredited verifier, usually produces a fairer and often lower liability, which is why sourcing that data from suppliers is the priority task in 2026.