UK Carbon Border Adjustment Mechanism (UK CBAM): Everything you need to know

The UK’s Carbon Border Adjustment Mechanism (CBAM) comes into force on 1 January 2027. It introduces a carbon-based charge on certain imported goods to ensure overseas producers face a similar carbon cost to UK manufacturers.

For many businesses, UK CBAM will create new reporting obligations, supplier data requirements and potentially a new tax liability.

This guide is designed to help finance directors quickly determine whether UK CBAM is relevant to their organisation. If it is, our detailed implementation guide provides a practical roadmap for compliance.

Everything you need to know about Carbon Border Adjustment Mechanism or UK CBAM

Does UK CBAM apply to your business?

You may need to take action if your business:

• Imports goods into the UK.
• Imports aluminium, cement, fertilisers, hydrogen, iron or steel products.
• Purchases goods directly from overseas suppliers.
• Uses customs agents to import goods on your behalf.
• Has already considered EU CBAM requirements.

If none of these apply, UK CBAM is unlikely to be relevant.

If one or more apply, it is worth investigating further.

The 3 key timeframes you need to know for UK CBAM

1. Between now and 1 January 2027

The aim is to understand whether your business is affected and make sure you can collect the right information from day one.

• identify imported goods that may be in scope
• confirm which legal entity is the importer
• monitor the rolling £50,000 threshold
• speak to suppliers about emissions information
• estimate the potential cost
• agree who owns UK CBAM internally
• update systems, customs broker instructions and supplier processes where needed

2. During 2027

The first UK CBAM accounting period runs from 1 January 2027 to 31 December 2027. During 2027, keep records of imported goods, commodity codes, customs values, countries of origin, importer of record, reportable import dates, supplier emissions data where available, and evidence of any explicit carbon price paid overseas.

Finance teams should also keep a live view of the £50,000 threshold and start reviewing whether UK CBAM could affect pricing, margins, supplier choices or customer contracts.

 

3. From 2028 onwards

The first UK CBAM return will relate to the 2027 accounting period and is expected to be submitted and paid in 2028. Later accounting periods are expected to move to a quarterly cycle, making UK CBAM part of normal finance, tax, customs and procurement processes.

How does UK CBAM differ from EU CBAM?

Businesses trading through both markets should assess each regime separately, even where the same supplier information can support both.

EU CBAM	UK CBAM
Operates through authorised declarants and CBAM certificates	Operates as a UK tax, administered through HMRC
Definitive regime began on 1 January 2026	Begins on 1 January 2027
Includes electricity in embodied emissions	Excludes electricity in embodied emissions at launch (expected in 2029)
A mass-based threshold applies to most CBAM goods	Registration is based on value of goods imported
EU importing and reporting requirements apply	UK importing, registration, return and payment requirements apply

Need more detail?

This guide is intended as a high-level introduction.

Our detailed implementation guide covers:

• Determining whether imports are in scope.
• Understanding registration requirements.
• Calculating emissions and CBAM liability.
• Using actual emissions data and verification requirements.
• Carbon Price Relief.
• Record keeping and evidence requirements.
• Practical implementation steps for finance and procurement teams.

If you have concluded that UK CBAM may affect your business, the next step is to read the full implementation guide here.

How can AAB support you with UK CBAM?

AAB’s Sustainable Business & ESG team can provide proportionate support, from an initial readiness review through to a more detailed implementation plan. We can help you:

• review import data and commodity codes to identify goods that may be in scope;
• assess whether the rolling £50,000 threshold could be met;
• map the importing legal entities and clarify internal ownership;
• identify gaps in supplier emissions information and support supplier engagement;
• model potential UK CBAM costs and commercial impacts; and
• identify changes needed to systems, contracts, processes and evidence files.

If UK CBAM could affect your business, starting early will make it easier to confirm the scope, improve data quality and understand the commercial impact before the regime begins. Please don’t hesitate to get in contact with Louise Neilson, another member of the ESG team or your usual AAB contact.