HM Revenue & Customs (HMRC) has published a series of new guidance documents to help businesses prepare for the UK’s Carbon Border Adjustment Mechanism (CBAM), which comes into effect on 1 January 2027.
The latest updates provide greater clarity on how the new tax will work, including how carbon emissions will be measured, how importers can estimate potential costs and what information businesses will need to retain.
With implementation approaching, businesses importing affected goods should begin reviewing their supply chains and preparing for the new requirements.
What is UK CBAM and who will be affected?
UK CBAM is a new tax designed to ensure that certain goods imported into the UK face a carbon cost comparable to similar products manufactured domestically.
It will apply to specified goods within five sectors:
- Aluminium
- Cement
- Fertilisers
- Hydrogen
- Iron and steel
Not every product within these sectors will be affected. Businesses should check their import commodity codes against the government’s published list to determine whether their goods are covered.
The new rules will apply to relevant imports into the UK, including Northern Ireland.
What has changed in the latest guidance?
HMRC’s latest publications provide important information to help importers understand and prepare for their potential obligations.
Government default emissions values are now available. These allow businesses to calculate the carbon emissions associated with imported goods without necessarily having to obtain actual emissions data from their overseas suppliers. Alternatively, businesses can use actual emissions data where it has been independently verified.
Illustrative CBAM rates have been published. These provide an early indication of potential costs. Actual rates will vary depending on the sector and will be updated quarterly, with the first rates expected before the end of 2026.
Record-keeping requirements have been clarified. Importers will need to retain information about affected goods from 1 January 2027, even where they do not meet the threshold for CBAM registration.
The guidance also outlines the responsibilities of overseas manufacturers in providing verified emissions information to UK customers.
What should businesses do now?
Although CBAM does not begin until January 2027, importers should use the remaining preparation period to take five practical steps.
- Check whether your products are affected
Review the commodity codes for the goods you import and compare them against the official UK CBAM product list.
- Review your import values
Consider the value of affected goods you expect to import during 2027. A £50,000 registration threshold applies, assessed using tests that look ahead over 30 days and back over 12 months.
- Speak to your overseas suppliers
Establish whether suppliers can provide verified emissions information or whether using government default values may be more appropriate.
- Prepare your records
Ensure your systems can capture relevant import details, including commodity codes, dates, customs values, weights and supporting documentation. Relevant records must generally be retained for six years.
- Plan for registration and reporting
HMRC has confirmed that CBAM registration will open on 1 January 2028. Businesses meeting the registration threshold during 2027 will have until 31 January 2028 to register, with the first return and payment deadline falling on 31 May 2028.
Preparing for the changes
The latest guidance gives businesses a clearer picture of what to expect, but some technical documents remain in draft and further updates are anticipated before implementation.
Taking action now will help importers understand their potential exposure, engage with overseas suppliers and avoid gaps in the information needed to meet future requirements.
How can Thames Valley Chamber of Commerce help?
Our International Trade & Customs team can support businesses in understanding the customs information relevant to CBAM, reviewing affected imports and preparing for upcoming changes.
For further advice and support, contact our International Trade team at trade@tvchamber.co.uk.
For further information, visit the UK Government’s CBAM guidance and policy summary.
