The UK carbon border adjustment mechanism starts on 1 January 2027. It charges a carbon price on imports of aluminium, cement, fertilisers, hydrogen, and iron and steel, and it catches any importer bringing in £50,000 or more of those goods in a rolling twelve months. Glass and ceramics, originally proposed, are not in scope from 2027.
What CBAM is for
UK producers of carbon-intensive goods pay for their emissions through the UK Emissions Trading Scheme. Importers of the same goods have not, which leaves domestic production at a disadvantage and creates an incentive to move production somewhere with a weaker carbon price. CBAM closes that gap by charging imports a price referenced to the UK's own.
It is a tax, not a trading scheme. Part 5 of Finance Act 2026 — sections 142 to 158, with Schedule 17 — establishes it in terms: a tax called the carbon border adjustment mechanism is charged in accordance with this Part. It has effect for goods imported into the UK on or after 1 January 2027.
Who has to register
The threshold is £50,000 of CBAM goods, tested two ways: the value imported in the preceding twelve months, or the value expected in the coming thirty days. Operationally, from 1 January 2027 you check on the first day of each month whether you have imported £50,000 or more of CBAM goods in the previous twelve months.
The threshold does a lot of work. HMRC estimates it removes more than 80% of the importers who would otherwise be affected, of whom more than 70% are SMEs. If you import these goods occasionally or in small volumes, the likely answer is that CBAM does not reach you — but the test is a rolling one, and a business whose volumes are growing should be monitoring rather than assuming.
Note that the £50,000 figure sits in guidance and secondary legislation rather than in Part 5 of the Act itself.
How the charge is worked out
Liability is the sectoral domestic price applicable to the good, multiplied by the tonnes of carbon dioxide equivalent emissions embodied in it. The structure has three moving parts:
- The sectoral domestic price is derived from UK ETS auction clearing prices, adjusted by each sector's baseline free allocation percentage. It is calculated and published by the government at the beginning of each quarter from 1 January 2027, so it is a known number rather than one you estimate;
- Free allowances are phased out through an annually adjusted reduction factor, so the effective rate rises over time even where the underlying carbon price does not;
- Embodied emissions have to be determined for the goods actually imported, which is the part that depends on information from your supplier rather than from HMRC.
Where the goods have already borne a carbon price overseas, carbon price relief reduces the liability — but the total relief claimed cannot exceed the CBAM liability due. It is a credit against the UK charge, not a refund mechanism.
Returns and payment
The first accounting period is annual: 1 January to 31 December 2027, with the return and payment due by 31 May 2028. After that the periods become quarterly, from 1 January 2028 onwards, with payment generally due two months after the end of each period.
That first long period is a mixed blessing. It gives a year of transactions before anything has to be filed, which sounds generous and in practice means twelve months of data has to be reconstructed if nobody was capturing it from January 2027. The businesses that find this difficult will be the ones that treated the 2028 deadline as the start of the work.
What the rules do not yet say
Three sets of regulations were laid in July and September 2026, following draft versions consulted on earlier in the year, so the detailed framework is being filled in. But it is not complete, and some things that get asserted confidently are not yet established — including when registration applications actually open. The primary guidance sets out the obligation from 1 January 2027 and the rolling threshold test; it does not give a date on which the registration service opens.
If you are planning around this, plan around the obligation date and the data, and check the registration mechanics closer to the time rather than relying on a figure from a summary article.
Getting ready
The practical work divides into three. First, establish whether you are in scope at all — that means identifying imports by commodity code against the five sectors, and valuing them on a rolling twelve-month basis. Many businesses will be able to close the question here.
Second, if you are in scope, the binding constraint is supplier data. Embodied emissions come from the producer, and a supplier who has never been asked for them will not have them to hand. Building that into procurement conversations and contracts during 2026 is considerably easier than requesting it retrospectively in 2028.
Third, price it. CBAM is a real cost of import for affected goods, and it interacts with duty, import VAT and customs valuation in the landed cost model. A business quoting fixed prices into 2027 on these commodities without allowing for it is quoting at a margin it has not checked.
Acumon advises importers and manufacturers on the tax and reporting consequences of CBAM through business tax and ESG assurance work, alongside tax compliance — see also our guide to ESG reporting. If you import steel, aluminium or cement in any volume, the twelve-month value test is the first calculation to run.