Check whether you must register for the UK carbon border adjustment mechanism (CBAM) and how to account for it

The UK carbon border adjustment mechanism (CBAM) is a tax on the carbon emissions embodied in certain imported goods. It applies to goods imported into the UK on or after 1 January 2027. If you import aluminium, cement, fertiliser, hydrogen or iron and steel goods in the course of a business, you must check whether they are in scope, keep records of them from the start date, and register with HMRC once they pass the threshold.

The CBAM regulations made under the Finance Act 2026 (SI 2026/802, 809, 830 and 995), which set the valuation, calculation, transitional and verification rules, have been made but are not yet in force. They come into force on 1 January 2027, when CBAM starts, so the rules this guide takes from them apply from that date.

Who this applies to and from when

CBAM applies to five groups of goods, identified only by their commodity code. Where the goods were made does not decide whether they are in scope: goods from any country can be CBAM goods. Origin matters only for the exemptions, which take UK-origin goods and goods re-imported under returned goods relief out of the charge.

The person liable is the importer. If a customs declaration is made in your name, or on your behalf, you are the importer for CBAM. Using a customs agent, freight forwarder, haulier or fast parcel operator does not move the liability to them. If you act as an agent, the CBAM liability falls on your clients, not on you, even though you make the declarations for them.

Check the codes on your import declarations against the goods list below, or follow the classification steps in Import customs declarations and procedures if you are unsure which code applies.

Work out whether you must register

You must register for CBAM with HMRC once the CBAM goods you import in the course of a business reach the registration threshold, measured by aggregate customs value, on either of two tests. The look-back test is checked on the first day of every month and adds up the customs value of the CBAM goods you imported over the look-back period. The look-forward test applies at any time and asks whether you expect your CBAM imports over the coming period to reach the threshold. Imports before 1 January 2027 do not count towards either test, and neither do UK-origin goods, returned goods or private imports. The threshold and the length of each test period are set out below.

Your trigger date is the earlier day on which you pass either test. How long you then have to register, the later deadline for anyone who triggers registration during 2027, and when HMRC expects its CBAM registration service to open are also set out below. Keep the records you will need until the service opens.

If you stay below the threshold you owe no CBAM on your imports, but you must still keep import records for every CBAM good. HMRC can treat connected businesses that split their imports to stay under the threshold as a single taxable person.

How the charge is worked out

The CBAM charge on each good is the sectoral price for the quarter, in pounds per tonne of carbon dioxide equivalent, multiplied by the emissions embodied in the good. HM Treasury sets a separate price for each of the five sectors every quarter, starting from the UK ETS auction price and reducing it to reflect the free allowances UK producers in that sector receive. You must use the price for the quarter in which the goods were imported.

You work out the embodied emissions in one of two ways. You can use the default value HM Treasury publishes for each CBAM good, multiplied by the weight of the goods you imported. Or you can use verified actual emissions data from the installation that made the goods, checked by an independent, accredited verifier. Default values may be set so that they give no advantage over using actual data.

Only direct emissions from production count at the start. The government has said it does not intend to bring indirect emissions from electricity into scope before 2029, but that is a statement of policy, not law.

If a qualifying carbon price was already paid on the same emissions where the goods were made, you can claim carbon price relief, provided you hold a carbon pricing verification form completed by an accredited verifier for the installation.

As at 26 September 2026 HM Treasury has not published the default values or the first quarterly sectoral prices, so no worked example of a CBAM bill is possible yet. Check the GOV.UK CBAM collection for the first published prices and default values.

Returns, payment and records

Once you are registered, or should be registered, you must submit a CBAM return and pay the CBAM due for every accounting period. The first accounting period covers the whole of 2027. Two shorter transitional periods follow in 2028, and after them the standard quarterly rhythm applies. The return and payment date for each period is set out below.

The return covers the accounting period once you are registered or registrable. Separately, the duty to keep an import record for each CBAM good applies to every business importer from 1 January 2027, whether or not you ever cross the threshold, so your records must start on that date and not on the date you registered. If you use actual emissions data or claim carbon price relief, you must also keep the verification evidence behind each figure. The retention period for all of these records is set out below.

Penalties and interest

CBAM uses the civil penalty regimes HMRC already applies to other taxes: a failure-to-notify penalty if you do not register, penalty points for late returns, error penalties based on the tax understated, and late-payment penalties. Separate fixed penalties apply for not telling HMRC about changes to your registration details and for each record-keeping failure. Late-payment interest runs on CBAM paid late from 1 January 2027, including on any CBAM penalty paid late. Fraudulent evasion and deliberate misstatement are criminal offences.

Related rules

UK Emissions Trading Scheme

CBAM puts imports on the same footing as UK production under the UK Emissions Trading Scheme (UK ETS). The sectoral price is the UK ETS auction price reduced by the free allocation UK producers in the sector still receive. As that free allocation is phased out for CBAM sectors from 2027, the reduction shrinks and the CBAM price rises towards the full UK ETS price. The Treasury has power to exempt goods from a country whose emissions trading scheme is linked to the UK ETS, but no such regulations have been made, so EU goods are in scope on the same basis as goods from anywhere else.

Northern Ireland

CBAM applies to imports into the whole of the UK, including Northern Ireland, and to goods entering from the Crown Dependencies. Union goods entering Northern Ireland from the EU count as imports for CBAM unless Treasury regulations exclude them, and no such regulations have been made. Where no customs declaration applies, the importer is the person on whose behalf the goods are brought in. Goods exported from Northern Ireland to the EU and re-imported within 3 years in the same state are exempt.