Additional details about the UK CBAM and its onset from January 1, 2027


Following the EU’s lead with the CBAM in October 2023, the UK has initiated its own version, also aiming to achieve its goal of net zero emissions by 2050. The UK announced plans for its CBAM in December 2023, signalling a significant move towards sustainability and carbon pricing.

Additional information regarding the planned implementation of the UK CBAM has been made available through a new consultation, scheduled to conclude on 13 June 2024.

An overview of this is as follows below:

Aim of the UK CBAM
  • Address carbon leakage by taxing carbon-intensive imports.
  • Ensure imported goods face an equivalent carbon price to UK-produced ones.
  • Linked to the UK ETS.
Key Features of the UK CBAM
  • Scope covers aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron & steel. It will include some precursor goods that are used in the production process of another good subject to CBAM.
  • Covers direct and indirect emissions.
  • The CBAM liability falls on importers or where there are no customs controls, the person on whose behalf the goods are moved to the UK.
  • CBAM Tax: embedded emissions based on default or actual values and discounted for any carbon price paid abroad.
  • No UK CBAM liability under a registration threshold of GBP 10,000 per year.
  • Importers will not be required to purchase and surrender UK CBAM certificates.
  • HMRC administers the tax.
  • UK CBAM rate will be set quarterly for each of the seven sectors of goods covered, aligning it with domestic carbon pricing policies.
Administration of the UK CBAM
  • Annual tax return due by May 2028 (or the period 1 January to 31 December 2027), followed by quarterly reporting (for the period 1 January to 31 March 2028 onwards).
  • Importers self-assess their liability.
  • Tax applies when goods are released for consumption in the UK.
  • Tax payment timing corresponds to annual tax return.
Business Considerations
  • Uncertainty remains regarding UK CBAMS’s application in Northern Ireland.
  • Businesses need to adapt systems to manage obligations for both UK and EU CBAM.
  • Collaboration across supply chains is crucial with both UK and EU CBAM in parallel..
What’s next?
  • The UK government is seeking views from businesses through consultations. Read here for more information on this.
  • Responses will shape the final design of the UK CBAM.
  • Primary legislation expected after consultation analysis.

Both the UK and EU CBAM frameworks show that carbon pricing is gaining importance as governments speed up efforts to reach net zero emissions by 2050. Without a global carbon price, more regions might adopt similar measures to tackle carbon leakage.

Although the details of UK CBAM are not yet finalised, if you have any questions or would like to discuss what this entails for your business, please feel free to reach out to one of our experts. We are happy to guide you further.