The UK Government has confirmed that the Carbon Border Adjustment Mechanism (CBAM) will be introduced from 1 January 2027, marking a major change in how carbon‑intensive imports are regulated and priced. Although similar to the EU CBAM, the UK scheme will operate as a carbon‑linked tax, aligned to the UK Emissions Trading Scheme (ETS), rather than a certificate‑based system.
The UK Government has confirmed that the Carbon Border Adjustment Mechanism (CBAM) will be introduced from 1 January 2027, marking a major change in how carbon‑intensive imports are regulated and priced. Although similar to the EU CBAM, the UK scheme will operate as a carbon‑linked tax, aligned to the UK Emissions Trading Scheme (ETS), rather than a certificate‑based system.
At its core, UK CBAM aims to prevent carbon leakage by ensuring imported goods face a carbon cost equivalent to those produced domestically. For many UK importers, this introduces new reporting, data‑collection and financial obligations that will require preparation well in advance of 2027.
UK CBAM is coming, and the groundwork needs to start now. Organisations that prepare early will be best placed to manage cost, complexity and carbon risk in an increasingly carbon‑priced global economy.
Which Businesses Will Qualify for UK CBAM?
UK CBAM will apply to UK‑based importers of certain carbon‑intensive goods from non‑UK countries. Whether a product is in scope depends on its commodity (CN) code at customs, not simply how it is described commercially.
The initial in‑scope sectors include:
- Cement
- Iron and steel
- Aluminium
- Fertilisers
- Hydrogen
- Selected finished and semi‑finished products (e.g. screws and bolts) where CN codes apply
From 2027, affected importers will need to calculate and report the embedded emissions associated with these goods and pay a CBAM charge based on those emissions.
UK CBAM may apply to a broader range of businesses than many expect, due to its relatively low registration threshold and value-based design compared with EU CBAM.
Organisations will be affected where the value of in scope goods imported into the UK meets or exceeds £50,000, either based on the expected value of imports over the next 30 days or the cumulative value imported over the preceding 12 months. This means liable importers will need to account for all CBAM goods, not only the portion above £50,000. As such, businesses with intermittent or project-based imports may still fall within scope.
Unlike EU CBAM, failure to register is not a passive risk: HMRC has the power to identify potentially liable importers using customs declaration data and existing customs systems, register them for UK CBAM, assess the CBAM liability due, and apply penalties where obligations have not been met.
Early identification of exposure and timely registration will therefore be critical to avoiding both unexpected tax liabilities and enforcement action.
What Importers Need to Know About UK CBAM
The first UK CBAM reporting year will be calendar year 2027, with the first submission and payment due by 31 May 2028. Reporting will initially be annual, moving to quarterly from 2028.
Key features of the UK CBAM include:
- The importer is the liable party, responsible for reporting and payment
- Importers can use verified supplier‑specific emissions data or default values
- Default values are expected to be punitive, leading to higher CBAM costs
- UK CBAM will initially cover direct emissions only, with indirect emissions expected to follow later
- Supplier engagement will be critical, particularly for Tier 1 and Tier 2 data
For many businesses, CBAM will be as much a supply‑chain challenge as a reporting one.
What UK Businesses Can Do Now to Prepare
Although reporting does not begin until 2027, organisations that wait risk higher costs, rushed data collection and supplier disruption. Early preparation gives organisations more control over cost, risk and supplier relationships.
Practical steps businesses can take now include:
- Identify potential exposure – Review import data and CN codes to understand whether goods may fall within CBAM scope.
- Map supply chains early – Identify suppliers, production sites and countries of origin for in‑scope goods. Complex or opaque supply chains will require more lead time.
- Engage suppliers on emissions data – Start conversations with suppliers about their ability to provide verified energy and emissions information. Many suppliers will need support to do this.
- Assess data gaps and risks – Understand where default values may apply and what this could mean financially.
- Integrate CBAM into wider carbon strategy – CBAM data aligns closely with carbon foot printing, Net Zero planning and procurement strategy – early alignment avoids duplication later.
How McGrady Clarke Can Help
McGrady Clarke supports organisations across both EU and UK CBAM, helping clients move from uncertainty to confident compliance. Our CBAM services include:
- Confirming CBAM scope and CN code applicability
- Mapping complex international supply chains
- Supporting supplier engagement and data collection
- Calculating embedded emissions using approved methodologies
- Preparing CBAM‑aligned reporting outputs
- Advising on submission, payment and ongoing compliance
Beyond compliance, we help organisations use CBAM insights to reduce exposure to default values, improve supply‑chain transparency and support wider decarbonisation strategies.
Share this article:
