UK CBAM 2027 - what importers and overseas suppliers need to do

Breathe ESG supports all major global reporting frameworks, from CBAM and UK SRS to CSRD, ISSB, GRI and CDP, from one managed dataset.

Last reviewed: 11 November 2026. Sources for every date and rate: GOV.UK CBAM policy summary and HMRC illustrative CBAM rates (16 October 2026). General information, not tax advice.

The short answer

The UK's carbon border adjustment mechanism starts on 1 January 2027. It puts a carbon price on imports of aluminium, cement, fertiliser, hydrogen, and iron and steel. The importer is liable, once imports pass a £50,000 threshold. Registration opens on 1 January 2028, and the first return and payment are due by 31 May 2028, covering calendar year 2027.

At launch it covers direct emissions only. The government has pushed indirect emissions (electricity used in production) back to 2029 at the earliest.

Key dates

Date	What happens
Before end of 2026	HMRC publishes the CBAM rates for January to March 2027
1 Jan 2027	UK CBAM starts; the first accounting period begins
Start of each quarter	New sector rates published
31 Dec 2027	First accounting period ends
1 to 31 Jan 2028	Registration window for first-year importers
31 May 2028	First return and payment due
2029 at the earliest	Indirect emissions could come into scope

Which goods are covered

Five sectors, including some precursor goods used to make them:

Iron and steel: from basic products like pig iron and semi-finished steel through to many downstream steel products.
Aluminium: unwrought aluminium and a range of aluminium products.
Cement: cement and clinker.
Fertiliser: nitrogen-based fertilisers and related products.
Hydrogen.

Coverage is set by commodity code. Check every code you import against HMRC's published list rather than relying on the sector name. Electricity is not covered, unlike the EU CBAM.

How the UK CBAM rate works

There's no single headline rate. HM Treasury sets one rate per sector each quarter, and the liability is calculated like this:

CBAM liability = embodied emissions × sector CBAM rate − carbon price relief

Starting price: the average UK ETS auction clearing price in the previous quarter.
Free allocation adjustment: the rate is cut to reflect the share of UK producers' emissions covered by free UK ETS allowances, so importers pay roughly what domestic producers effectively pay.
Phase-out factor: that adjustment shrinks over time as free allocation is withdrawn. For 2027 the factor is 97.5%.
Carbon price relief: if a carbon price was already paid abroad under a qualifying scheme, you can claim relief with HMRC's carbon pricing verification form.

Illustrative rates

HMRC published these on 16 October 2026, using the July to September 2026 UK ETS average of £58.15. They're not the rates that will apply. They show the likely scale.

Sector	Illustrative rate per tCO2e
Iron and steel	£9.69
Aluminium	£9.79
Cement	£8.78
Fertiliser	£1.45
Hydrogen	£9.24

HMRC's cement example: £58.15 × [1 − (87.1% × 97.5%)] = £8.78 per tCO2e.

Worked example (hypothetical)

A UK importer brings in 1,000 tonnes of steel in 2027. Its supplier reports embedded direct emissions of 2.0 tCO2e per tonne. No carbon price was paid abroad.

Embodied emissions: 1,000 × 2.0 = 2,000 tCO2e
At the illustrative steel rate: 2,000 × £9.69 = £19,380

If the supplier can't provide verified data, the importer may have to use default values, which are usually set higher. Good supplier data is the cheapest lever you have.

Who does what

UK importers of covered goods above £50,000 register, keep records, file the annual return and pay.
Overseas producers aren't liable, but their UK buyers will ask for installation-level embedded emissions and evidence of any carbon price paid. Producers that can supply this keep their customers' bills down.
Customs agents handle the import itself, but the CBAM return sits with the importer.

UK CBAM vs EU CBAM

	UK CBAM	EU CBAM
Start of payment phase	1 Jan 2027	Definitive period since 1 Jan 2026
Mechanism	A tax paid through an annual return	CBAM certificates surrendered, on sale from 1 Feb 2027
Threshold	£50,000 of covered imports a year	50 tonnes a year
Sectors	Aluminium, cement, fertiliser, hydrogen, iron and steel	The same five plus electricity
Emissions	Direct only; indirect from 2029 at the earliest	Direct, plus indirect for cement and fertilisers
First deadline	Return and payment by 31 May 2028	Annual declaration by 30 Sept 2027

Exporters selling into both markets face two buyer data requests on different calendars. Keep one emissions dataset per installation and map it to each regime. More on the EU side: CBAM-ready emissions tools.

What overseas suppliers should send UK buyers

Installation name, location and the production route used.
Direct embedded emissions per tonne of each product, with the method and period.
Emissions from key precursors, where relevant.
Evidence of any carbon price paid, for carbon price relief.
Electricity use per tonne. It isn't needed for the UK yet, but the EU already asks for it in some sectors, and the UK may from 2029.

Checklist for 2027

Map every import commodity code against the UK CBAM list.
Estimate whether your 2027 covered imports will pass £50,000.
Ask suppliers now for installation-level emissions data and the method behind it.
Budget using the illustrative rates, then update when the Q1 2027 rates are published.
Collect evidence of overseas carbon prices for relief claims.
Diary the January 2028 registration window and the 31 May 2028 return.
If you also import into the EU, line up the UK and EU data requests so suppliers answer once.

How Breathe ESG helps

Breathe ESG collects emissions data from suppliers and keeps it next to your own carbon accounts, with an audit trail back to source. One dataset can serve UK CBAM returns, EU CBAM declarations and customer requests.

People: ESG consulting and fractional CSOs to run supplier outreach with you.
Training: Breathe Academy for your procurement and compliance teams.
Community: Breathe Zero, a network of ESG professionals.

Book a 20-minute walkthrough.

FAQs

Do overseas producers pay UK CBAM?

No. The UK importer is liable. Producers carry the data burden instead.

Is the UK CBAM rate the full UK ETS price?

No. It's reduced to reflect free allowances UK producers get, which is why the illustrative rates are around £1 to £10 rather than £58.

Does UK CBAM cover electricity used in production?

Not at launch. Indirect emissions could be added from 2029 at the earliest.

What if my supplier won't share data?

You'll likely have to use HMRC default values, which tend to raise the bill. Build data clauses into contracts now.

Can I claim for an EU carbon price already paid?

Carbon price relief applies where emissions were covered by a qualifying carbon pricing scheme. Check HMRC's guidance for which schemes qualify and the evidence needed.