What is UK CBAM?
UK CBAM is a tax applied to the emissions associated with the production of certain goods that are imported to the UK. The goal is to ensure that imported goods face a carbon cost similar to that faced by goods produced in the UK and prevent production from shifting to countries with lower carbon costs. Businesses importing goods within the scope of UK CBAM are required to comply with the relevant obligations, including registering for the tax, and declaring and paying any UK CBAM tax due.
When does UK CBAM start?
UK CBAM starts on 1 January 2027 and will apply to imports of goods within scope from this date. First accounting period runs from 1 January to 31 December 2027 with the first return and payment due by 31 May 2028. Whilst the first payment deadline falls in 2028, CBAM has impact on profit and loss accounts for imports in 2027. Relevant import information and emissions data should be considered from the first period. The impact of CBAM should also be considered in forecasts, and across your company supply chain, project infrastructure budgets, and sales.
Which imported goods fall within scope?
UK CBAM covers certain goods within aluminium, cement, fertiliser, hydrogen, iron and steel sectors. Not every product in these sectors is automatically within scope. The goods’ 8-digit UK commodity code should be checked against the ones that covered by UK CBAM. This makes accurate tariff classification particularly important, as the product’s name or material content alone is not sufficient to determine whether it falls within scope.
Who is responsible for UK CBAM?
The responsible party is the importer: the business or the person in whose name,or on whose behalf, the customs declaration is made. The legal entity importing the goods bears a responsibility to register for CBAM in accordance with s 146 (1) of The Finance Bill 2026 read with reference to The Carbon Border Adjustment Mechanism (Administrative Provisions) Regulations 2026, Section 7 (1) which requires the importer / limited company exposed to CBAM to be required to register as an individual entity with HMRC. The registration obligation is also identified in Schedule 17 of The Finance Bill 2026. Due to this, the liability – and associated corporate veil, will rest with the limited company – rather than a VAT group where relevant. Where the relevant obligations arise, that importer is responsible for keeping records, submitting returns and paying any UK CBAM tax due. The overseas supplier can provide relevant emissions information but that does not transfer the responsibility of the importer to the supplier.
When does my business need to register?
There are two tests for determining whether your business needs to register. The backward-looking test applies where the total customs value of relevant CBAM goods imported over the preceding 12 months is £50,000 or more. The forward-looking test applies where the total customs value of relevant CBAM goods expected to be imported within the next 30 days is £50,000 or more. Meeting either test requires your business to register for UK CBAM.
These tests are based on the customs value of relevant CBAM goods, rather than the company’s turnover or the value of all its imports. The backward-looking test is applied on the first day of each month and, during 2027, only includes imports made from 1 January 2027 onwards.
Businesses that become liable to register during 2027 have a special registration deadline of 31 January 2028. From 2028 onwards, businesses must register within 30 days of becoming liable to register.
How is the UK CBAM charge calculated?
UK CBAM liability = Embodied Emissions x Applicable Sectoral CBAM Rate – Applicable Carbon Price Relief
Embodied Emissions: Determined using actual verified emissions data or default values. Emissions intensity is multiplied by the quantity of imported goods, using the appropriate units, to calculate total emissions in tCO₂e.
CBAM Rate: The rate published by the UK government for the relevant sector and quarter of import is applied, expressed in £/tCO₂e.
Carbon Price Relief: Where the relevant requirements are met, Carbon Price Relief can be deducted from the calculated CBAM charge. This relief cannot exceed the charge before relief is applied.
What are embodied emissions?
Under UK CBAM, embodied emissions are the relevant direct greenhouse gas emissions attributable to the production of the goods. These include emissions from producing relevant precursor goods used in the production process, where required by the UK CBAM calculation rules. Emissions from transporting the goods to the UK are not included.
What is the difference between actual emissions data and default values?
Actual emissions data reflects production emissions monitored and calculated in accordance with UK CBAM rules. This data must be verified by an accredited independent verifier who meets the relevant requirements concerning ISO/IEC 17029:2019, ISO 14064-3:2019, ISO
14065:2020, ISO 14066 standards, and are a full member of Global ACI.
Default values are standard emissions intensity values set by the UK government for the relevant CBAM goods. Where actual emissions data does not meet the requirements or is unavailable, default values must be used.
Usin verified actual emissions data can help businesses reduce their CBAM costs where the actual emissions intensity is lower than the applicable default value. All relevant requirements must be met for actual values to be used.
When are returns and payments due?
The first accounting period covers the full calendar year from 1 January to 31 December 2027, with the return and payment due by 31 May 2028. From 1 January 2028 onwards, accounting periods are quarterly, with a separate two month return and payment deadline for each period.
What information and records should my business prepare?
Importers must maintain import information, emissions information, carbon price relief documents and supporting records.
Import Information: The goods’ 8-digit commodity codes, net weight (kg), non-preferential origin and relevant import date or period. The customs value of the goods must also be recorded to assess the registration threshold.
Emissions Information: The applicable default value used or verified actual emissions intensity. Where actual data is used, relevant verification reports and supporting information from the manufacturer must also be retained.
Carbon Price Relief Documents: Where relief is claimed, the relevant carbon pricing verification form, calculations and records of the exchange rate used must be retained.
Supporting Documentation: Customs declarations, invoices and records showing how the CBAM calculation were made.
CBAM records must generally be retained for at least six years after the end of the relevant accounting period. For certain other records, the six-year period runs from the date they were created.
How can Alinea Customs help?
Alinea Customs can help assess whether your goods fall within scope, support the collection of relevant emissions data and verification documents from suppliers, and identify information gaps. We can also assist with financial and contractual planning and develop a tailored preparation roadmap for your business.
Through UK CBAM Fundamentals training, we can help strengthen your team’s knowledge and understanding of the steps needed to prepare your business.
