HMRC has published new information to help importers prepare for the UK Carbon Border Adjustment Mechanism (CBAM), ahead of its introduction on 1 January 2027.
Released on 16 October 2026, the publications include product-specific default emissions values and illustrative sector rates, giving businesses a clearer basis for assessing potential carbon costs.
However, the default values have been published in a draft notice, and the illustrative rates are not the confirmed rates that will apply when the scheme begins.
What is UK CBAM?
UK CBAM will place a carbon charge on the direct emissions embodied in certain goods imported into the UK, including relevant emissions from precursor materials used in their production.
The scheme is intended to address carbon leakage, where production and its associated emissions move between countries because of differences in carbon pricing.
It covers specified goods within five sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel. Only certain commodity codes are included, so businesses should check their individual products rather than assume that every import within these sectors is affected.
What are default emissions values?
Importers can use verified actual emissions data or government-set default values to determine the emissions associated with affected goods.
The newly published draft notice lists default values against eight-digit Combined Nomenclature (CN) codes. These are expressed in tonnes of carbon dioxide equivalent per tonne of product, providing a product-specific starting point for calculations.
The notice sets out values intended to apply from 1 January 2027 until 31 December 2028. A 10% markup is included across all covered sectors except fertilisers, where no markup applies. The notice remains in draft and has not yet taken legal effect.
Default values allow importers to meet their obligations where suitable actual emissions information is unavailable. Businesses using actual data must hold evidence that it has been independently verified in accordance with the UK CBAM requirements.
What illustrative rates have been published?
HMRC has published the following illustrative sector rates:
| Sector | Illustrative rate per tonne of CO₂ equivalent |
| Iron and steel | £9.69 |
| Aluminium | £9.79 |
| Cement | £8.78 |
| Fertilisers | £1.45 |
| Hydrogen | £9.24 |
These rates apply to emissions, rather than directly to the weight or value of a shipment.
They are based on current and preliminary data and should not be treated as forecasts or confirmed charges for 2027. The figures reflect UK Emissions Trading Scheme carbon prices, sector emissions information and the free allowances available to domestic producers.
HMRC will publish the applicable rates for January to March 2027 before the end of 2026, followed by quarterly updates.
How could this affect import costs?
A shipment’s weight alone will not determine its CBAM cost. The emissions intensity of the affected goods also matters.
Broadly, embodied emissions are calculated by multiplying the net weight of the goods in tonnes by the relevant emissions intensity per tonne of goods. The applicable sector rate is then applied, with any eligible Carbon Price Relief deducted. Specific conversion rules apply to actual emissions data for cement and fertilisers.
For planning purposes, the new publications can help businesses begin assessing possible costs. Estimates should be reviewed once the applicable rates are published and as more detailed supplier information becomes available.
What should importers do now?
Businesses should review their commodity codes, import values and product weights to identify potentially affected goods. Speaking with suppliers will also help establish whether suitable verified emissions data will be available or whether default values may be needed.
The £50,000 registration threshold needs monitoring. The rules include a backwards-looking test covering relevant imports over the previous 12 months and a forward-looking test where a business expects to import £50,000 or more of CBAM goods within the next 30 days. Imports before 1 January 2027 are excluded from the backwards-looking calculation.
Although CBAM liability can arise from 1 January 2027, registration opens on 1 January 2028. Businesses becoming liable during 2027 will have until 31 January 2028 to register and must retain the relevant records in the meantime.
Businesses importing affected goods below the registration threshold will still need records to demonstrate that they are not liable. Reviewing customs data and supplier information now can help identify gaps before the requirements begin.
References
- HMRC: Illustrative CBAM rates and worked example
- HMRC and HM Treasury: CBAM notices, including draft default values
- HMRC: UK CBAM policy summary
- HMRC: Prepare for UK CBAM
Please note: This article provides general information. Illustrative rates are subject to change, and the default values notice remains in draft. Businesses should consult the latest HMRC guidance when assessing their obligations.