Direct answer: the UK CBAM starts on 1 January 2027 and puts a carbon price on imports of five groups of "CBAM goods": aluminium, cement, fertiliser, hydrogen, and iron and steel. The liable person is the UK importer/customs declarant, not the Chinese exporter, but exporters must give UK customers verifiable emissions-intensity data; otherwise the importer can only use the government's default values (DVs). The registration threshold is £50,000 (forward-looking 30 days or backward-looking 12 months). Registration opens on 1 January 2028, with a first-year deadline of 31 January 2028. The first accounting period is calendar-year 2027, with the return and payment due by 31 May 2028; quarterly periods follow. CBAM initially covers direct emissions (including relevant precursors); indirect emissions are delayed until 2029 at the earliest. The government has published default values and illustrative rates: DVs by 8-digit CN code, and illustrative rates of about £9.69 for steel, £9.79 for aluminium, £8.78 for cement, £1.45 for fertiliser and £9.24 for hydrogen per tCO2e. These are "illustrative, based on current data", not final rates; the first quarterly rates will be published before 2027 and updated quarterly.
This guide is for Chinese manufacturers and traders exporting these goods to the UK, UK importers/customs brokers, emissions verifiers and supply-chain teams. It separates "who pays, how much, which data, when to register/file, and what exporters should prepare now." Sources are the GOV.UK CBAM policy summary (updated 2 November 2026), the CBAM collection (updated 9 September 2026), the default-values pages (published 16 October 2026) and the illustrative rates/worked example (published 16 October 2026), all accessed 8 November 2026. Official facts, editorial calculations and items to confirm are kept separate. This is not tax or legal advice.
(1) From 1 January 2027, UK importers pay CBAM on aluminium, cement, fertiliser, hydrogen and steel; Chinese exporters do not pay the tax directly, but must supply verifiable emissions data so customers pay less. (2) Actual data must be verified by a qualifying verifier (site visit, 5% materiality threshold); a return filed with default values cannot later be amended to actual data. (3) The first return is due 31 May 2028, but records must start on 1 January 2027; retrofitting data at the end usually fails.
Timeline: starts 2027, registration and first return 2028
The legal basis is the Finance Act 2026, supported by emissions/verification regulations and force-of-law notices progressed in 2026. The policy summary states: liability starts 1 January 2027; registration opens 1 January 2028; calendar-year 2027 is the first accounting period; the first return is due 31 May 2028. That means goods imported in 2027 are not immediately reported, but customs, weight, emissions-intensity and carbon-price evidence must be retained from day one. Reconstructing verifiable data in 2028 is usually not possible.
| Date | Event | What it means |
|---|---|---|
| 2026 | Finance Act 2026, secondary legislation, DVs and illustrative rates published | Scope, rate methodology, DVs and verification rules set |
| 1 Jan 2027 | CBAM starts | UK importers begin to incur liability; exporters begin to supply data |
| Calendar 2027 | First accounting period (annual) | Keep records by quarter/consignment; prepare first return |
| 1 Jan 2028 | Registration opens | Importers above the £50,000 threshold register |
| 31 Jan 2028 | First-year registration deadline | Latest date for first-year importers to register |
| 31 May 2028 | First return and payment due | 2027 CBAM return/payment |
| From 2028 | Quarterly returns | File/pay by the official quarterly deadlines |
| 2029 earliest | Indirect emissions may be included | Electricity/indirect emissions not in the 2027 scope |
Sources: GOV.UK "Carbon Border Adjustment Mechanism (CBAM): Policy summary" (updated 2 November 2026) and the CBAM collection (updated 9 September 2026). Editorial summary; dates/transitional arrangements follow the latest legislation and HMRC guidance.
Scope: five sectors, CN codes, scrap excluded
CBAM covers specified CBAM goods imported into the UK (including Northern Ireland), identified by 8-digit CN code, in aluminium, cement, fertiliser, hydrogen, and iron and steel. The government confirms glass and ceramics are not in the 2027 scope and aluminium/steel scrap is excluded by the relevant CN codes; goods entering the UK from the Crown Dependencies, Overseas Territories and the UK Continental Shelf are also subject. It applies per consignment by CN code, weight and emissions intensity, not per company or brand. The exporter's first step is mapping each product to the UK Tariff's 8-digit CN code, not just "aluminium" or "steel".
| Sector | Example CN / product | Default value (tCO2e/t) | Note |
|---|---|---|---|
| Aluminium | 76011090 unwrought non-alloy aluminium | 2.136 | Slabs 76011010: 2.058 |
| Aluminium | 76012040 unwrought alloy billets | 2.030 | Alloy slabs 76012030: 2.038 |
| Aluminium | 76041010 non-alloy bars/rods/profiles | 3.021 | Hollow alloy profiles 76042100: 3.894 |
| Steel | 72083800 hot-rolled coil (>=3mm and <4.75mm) | 3.778 | 72083700: 3.314 |
| Steel | 72142000 ribbed rebar/coils | 3.040 | 72149910 smooth rebar: 2.562 |
| Steel | 72011011 non-alloy pig iron | 1.331 | 72011090: 2.698 |
| Cement | 25231000 cement clinkers | 1.433 | 25232900 Portland cement: 1.375 |
| Fertiliser | 31021019 urea (>45% N) | 1.392 | 31021090: 1.773 |
| Hydrogen | 28041000 hydrogen | See official DV page | Check the latest value by CN code |
Sources: GOV.UK default-values pages (Aluminium/Cement/Fertilisers/Iron and steel, published 16 October 2026). Only examples are shown; use the official page for the full 8-digit CN list. DVs may be updated; use the version in force at filing.
Calculation: CBAM charge minus Carbon Price Relief
The liability formula is: CBAM charge = imported embodied emissions x CBAM rate; Carbon Price Relief (CPR) = relevant embodied emissions x effective carbon price; liability = charge - CPR. Embodied emissions = emissions intensity (tCO2e/t) x weight (t); complex goods also include relevant precursor emissions. Emissions intensity can come from verified actual data or government DVs. Note: if the final good uses DVs, precursors cannot use actual data; if the final good uses actual data, precursors may use actual or DVs.
| Component | Calculation | Data source/caveat |
|---|---|---|
| CBAM charge | Embodied emissions x CBAM rate | Rate by sector, published quarterly |
| Embodied emissions | Intensity (tCO2e/t) x weight (t) | Verified actual or DV; includes relevant precursors |
| Carbon Price Relief | Relevant emissions x effective carbon price | Evidence of deductible carbon price in origin country |
| Liability | Charge - CPR | CPR cannot be negative; retain evidence |
| Weight | Declared in kg; HMRC converts to tonnes | Net weight by CN code/consignment |
| Precursors | Precursor weight x precursor intensity/DV | Complex goods; see System Boundaries |
Sources: GOV.UK CBAM policy summary section 5 (updated 2 November 2026) and the default-values pages. Editorial summary; qualifying carbon prices, evidence and verification follow official guidance.
Illustrative rates and 1,000-tonne examples: scale only, not final tax
On 16 October 2026 GOV.UK published "illustrative rates": based on the Q3 2026 average UK ETS price and preliminary baseline data, the 2027 rates would be about £9.69 for steel, £9.79 for aluminium, £8.78 for cement, £1.45 for fertiliser and £9.24 for hydrogen per tCO2e. The government explicitly says these are not forecasts or final rates; the first quarterly rates will be published before 2027 and updated quarterly. Using these and DVs gives a quick order of magnitude for 1,000 tonnes: aluminium about £20,911, steel about £36,609, cement about £12,582 and urea about £2,018; actual liability also subtracts CPR and will change with rates/DVs.
| Sector / example | Illustrative rate (£/tCO2e) | DV (tCO2e/t) | 1,000 t emissions (tCO2e) | Illustrative liability (£) |
|---|---|---|---|---|
| Aluminium 76011090 | 9.79 | 2.136 | 2,136 | 20,911.44 |
| Steel 72083800 | 9.69 | 3.778 | 3,778 | 36,608.82 |
| Cement 25231000 | 8.78 | 1.433 | 1,433 | 12,581.74 |
| Urea 31021019 | 1.45 | 1.392 | 1,392 | 2,018.40 |
| Hydrogen 28041000 | 9.24 | See official DV | - | - |
Editorial calculation: 1,000 t x DV x illustrative rate; excludes Carbon Price Relief, FX, tax, monitoring/verification cost and final rate changes. Illustrative rates come from GOV.UK "Illustrative CBAM rates (and worked example)" (16 October 2026); the government states the data may change, the first quarterly rates will be published before 2027 and updated quarterly, and the figures are not final liability or forecasts.
How the rate is built: UK ETS average x free-allocation phase-out
CBAM has no single fixed rate. It is calculated by sector and quarter as: average UK ETS price x [1 - (baseline free-allocation percentage x free-allocation phase-out factor)]. The official cement example uses the Q3 2026 average of £58.15, a cement baseline free-allocation percentage of 87.1% and a 2027 phase-out factor of 97.5%, giving £8.78/tCO2e. As free allowances are phased out, the CBAM rate changes over time; do not use the 2027 illustrative rate as a 2030 budget.
| Input | Cement example | Note |
|---|---|---|
| Average UK ETS price | £58.15/tCO2e (Q3 2026) | Previous quarter's auction average; latest auction quarter if none |
| Baseline free-allocation percentage | 87.1% | Sector sub-installation free allowances/direct emissions |
| Free-allocation phase-out factor | 97.5% (2027) | Same across the five CBAM sectors |
| Rate formula | £58.15 x [1 - (87.1% x 97.5%)] | Official example: £8.78/tCO2e |
| Update frequency | Quarterly | First quarterly rate published before 2027 |
Source: GOV.UK "Illustrative CBAM rates (and worked example)" (16 October 2026). The table reproduces the official cement example; other sectors use their own baseline free-allocation percentage and the same phase-out factor. Illustrative data may change; final rates follow the first quarterly publication and updates.
Actual data vs default values: how to choose
DVs let an importer file without installation data, but at a cost: a return filed with DVs cannot later be amended to actual data; DVs are government averages and may be above or below your actual intensity. Actual data requires monitoring, verification, a site visit and an evidence chain; it costs money, but exporters with low intensity and large volumes usually benefit. High-intensity or small-volume exporters may find DVs simpler. This is not a "compliant/non-compliant" choice but a cost/data/customer-contract trade-off, and it should be decided with the UK importer.
| Dimension | Verified actual data | Default values (DVs) |
|---|---|---|
| Data requirements | Monitoring plan, activity data, emission factors, evidence | Look up official DV by CN code; no installation data |
| Verification | Qualifying verifier, site visit, 5% materiality | No verification |
| Post-filing correction | Errors can be corrected within 3 years | Cannot switch to actual data |
| Liability impact | Lower if actual intensity is low | Government average; may be higher or lower |
| Cost/time | Monitoring, verification, travel, staff | Low upfront cost, but possibly overpayment |
| Customer/contract | UK importer may prefer locked actual data | Customer may ask for price cuts or data later |
Editorial summary, not official advice; eligibility, verification and filing rules follow GOV.UK guidance and HMRC requirements. Verification fees must be quoted by a qualifying verifier; this article does not quote them.
Registration, returns, records and penalties
UK importers above the £50,000 threshold must register. The threshold uses two tests: expected imports over the next 30 days, or actual imports over the preceding 12 months; meeting either triggers registration from the earlier date. Registration requires name/address/business type/EORI/VAT/trigger date/estimated 12-month weight by sector. Returns report each consignment by 8-digit CN code, net weight (kg), emissions intensity, carbon price paid, quarter and country of origin; records must be kept for 6 years; errors can be corrected within 3 years. HMRC can assess tax, compulsorily register and penalise failure to register/file/pay, errors and failure to comply with information notices.
| Step | Requirement | Evidence/caveat |
|---|---|---|
| Registration threshold | £50,000; forward 30 days or backward 12 months | Goods value follows customs valuation |
| Registration timing | Opens 1 January 2028; first-year deadline 31 January 2028 | Government Gateway; EORI/VAT |
| First return/payment | Calendar 2027; due 31 May 2028 | Quarterly thereafter |
| Return content | CN code, net kg, intensity, carbon price, quarter, origin | Each consignment separately |
| Record retention | 6 years after the accounting period | Customs declarations, bills of lading, commercial documents, valuation evidence |
| Correction/repayment | Within 3 years after the return period | Retain evidence; HMRC may check |
| Penalties | Failure to register/file/pay, errors, non-cooperation | HMRC assessment, compulsory registration, criminal provisions |
Sources: GOV.UK CBAM policy summary sections 6-9 (updated 2 November 2026). Editorial summary; threshold tests, valuation, return fields and penalties follow the latest legislation/HMRC guidance.
Exporter 90-day readiness checklist
Chinese exporters are not the CBAM taxpayer, but they are the data source. Use the first 90 days to connect product CN codes, UK customers/importers, DVs, actual emissions data, verifiers, contract terms and record retention. The order is: map, compare with DVs, choose actual/default, find a verifier, update contracts/systems, rehearse filing.
| Phase | Action | Output |
|---|---|---|
| Weeks 1-2 | Map each UK-bound product to its 8-digit CN code; confirm CBAM goods/scrap exclusions | Product-CN list, scope conclusion |
| Weeks 2-3 | Look up the official DV for each CN code and estimate the customer's potential liability | DV comparison, order-of-magnitude estimate |
| Weeks 3-5 | Inventory monitoring data/emission factors; compare actual intensity with DV | Data gaps, priorities |
| Weeks 5-7 | Decide actual verification vs DVs; contact qualifying verifiers for quotes/scheduling | Verification plan, budget |
| Weeks 6-8 | Agree data format, filing responsibility and price-adjustment/indemnity clauses with the UK importer | Contract annex, SOP |
| Weeks 8-10 | Build consignment-level records: CN, net weight, intensity, carbon price, origin, customs declaration | Data dictionary, ledger |
| Weeks 10-12 | Run a mock return/customer reconciliation and close gaps | Mock return, remediation list |
Editorial readiness advice, not an official template; monitoring, verification, filing and contract arrangements follow GOV.UK guidance, HMRC requirements and professional advice.
FAQ
When does the UK CBAM start?
It starts on 1 January 2027 for CBAM goods imported into the UK in aluminium, cement, fertiliser, hydrogen and iron/steel. The first accounting period is calendar 2027; the first return/payment is due 31 May 2028, and registration opens 1 January 2028.
Who pays CBAM? Does the Chinese exporter pay?
The liable person is the UK importer/customs declarant (or the person on whose behalf the declaration is made), not the Chinese exporter. The exporter must give the UK customer verifiable emissions-intensity data; otherwise the customer uses DVs, may pay more and cannot switch to actual data later.
Which products are covered?
Aluminium, cement, fertiliser, hydrogen, and iron and steel, determined by 8-digit CN code. Glass and ceramics are not in the 2027 scope; aluminium/steel scrap is excluded by the relevant CN codes. Check the official Annex/UK Tariff.
Should we use default values or actual data?
Actual data requires monitoring, verification and a site visit, but can significantly reduce liability when intensity is low and volumes are large. DVs have low upfront cost but cannot be replaced by actual data after filing. Decide based on intensity, volume, customer requirements and verification cost.
What is the CBAM rate?
There is no single fixed rate; it is calculated by sector/quarter from the UK ETS average and free-allocation phase-out. The 16 October 2026 illustrative rates were about £9.69 steel, £9.79 aluminium, £8.78 cement, £1.45 fertiliser and £9.24 hydrogen per tCO2e, but the government says they are not final; the first quarterly rates will be published before 2027 and updated quarterly.
Are indirect emissions included?
From 2027 only direct emissions (including relevant precursors) are covered; indirect emissions are delayed until 2029 at the earliest. Electricity/indirect emissions are not in the first period, but this may change and should be monitored.
What records must be kept?
CN code, import date, value, net weight, emissions intensity, carbon price paid, country of origin, customs declarations/bills of lading/commercial documents, etc., for 6 years after the accounting period. Errors can be corrected within 3 years.
What happens if we do not register or file?
HMRC can assess the tax, compulsorily register the business and penalise failure to register, file or pay, errors and non-cooperation with information notices; fraudulent evasion or deliberate misstatement can also attract criminal provisions. Check the legislation/HMRC guidance for details.
Research method and limitations
This article separates "official facts" from "editorial calculations." The start date, five sectors, CN scope, £50,000 threshold, registration/filing/payment timetable, 6-year retention, penalties, direct emissions/precursors and actual-vs-DV rules come from the GOV.UK "CBAM: Policy summary" (updated 2 November 2026) and the CBAM collection. CN-level default values come from the GOV.UK default-values pages (published 16 October 2026). Illustrative rates, the cement rate formula and the worked example come from GOV.UK "Illustrative CBAM rates (and worked example)" (published 16 October 2026). The 1,000-tonne liability estimates, 90-day checklist and actual-vs-DV framework are editorial.
Eight limitations: (1) this is not tax or legal advice; (2) illustrative rates are not final, and the first quarterly rates/updates are not yet published; (3) only example CN codes are covered, not all CBAM goods/precursors; (4) Carbon Price Relief, FX, verification/monitoring cost and contract price adjustments are excluded; (5) the latest UK Tariff/Annex CN changes are not checked line by line; (6) Northern Ireland/Crown Dependencies/special customs procedures are not fully covered; (7) EU CBAM/UK CBAM mutual recognition or differences are not assessed; (8) policy/guidance may change, so recheck the official pages before publishing or transacting.
Sources and basis
- GOV.UK, Carbon Border Adjustment Mechanism (CBAM): Policy summary (updated 2 November 2026): gov.uk/.../cbam-policy-summary. Scope, tax point, liability, registration/filing/records/penalties, £50,000 threshold, timetable. Accessed 8 November 2026.
- GOV.UK, Prepare for the Carbon Border Adjustment Mechanism (CBAM) (updated 9 September 2026): gov.uk/government/collections/carbon-border-adjustment-mechanism. Registration, records, emissions monitoring and verification entry points. Accessed 8 November 2026.
- GOV.UK, Check the default values for CBAM (published 16 October 2026): gov.uk/.../check-the-default-values-for-cbam. Aluminium/cement/fertiliser/hydrogen/steel DVs by CN code. Accessed 8 November 2026.
- GOV.UK, Illustrative CBAM rates (and worked example) (published 16 October 2026): gov.uk/.../illustrative-cbam-rates. Illustrative rates, cement rate formula/example, quarterly update. Accessed 8 November 2026.
Data cut-off 8 November 2026; rates/default values/scope follow the latest GOV.UK pages and HMRC guidance; this is not tax, legal or procurement advice.