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Carbon border tax

UK CBAM from 1 January 2027: a guide for importers of Chinese steel and aluminium

Last updated: · By Sarah Liu, Thornfield Resources

Short answer: from 1 January 2027 the UK charges a carbon border tax (CBAM) on imported aluminium, cement, fertiliser, hydrogen, and iron and steel. An importer that brings in £50,000 or more of these goods in 12 months must register with HMRC, file returns and pay. The first return covers 2027 and is due on 31 May 2028.

Who has to pay UK CBAM?

The person who imports the goods for commercial purposes, or on whose behalf they are imported, is liable. A customs or tax agent can file for you, but the liability stays with the importer. Personal, non-business imports are not covered.

QuestionAnswer
Start date1 January 2027, with no reporting-only phase
Goods coveredAluminium, cement, fertiliser, hydrogen, iron and steel, defined by commodity code. Glass and ceramics are not covered from January 2027. Copper is not covered.
Threshold£50,000 or more of CBAM goods over a 12-month period, tested looking forward 30 days and looking back 12 months
Emissions countedDirect (scope 1) emissions only at launch; indirect emissions from electricity not before 2029
Where it appliesThe whole UK, including Northern Ireland, on goods from every country, including the EU
Businesses affectedHMRC estimates about 10,000 importers of CBAM goods, with over 80% excluded by the threshold
RecordsKeep records of in-scope imports for six years

What are the key dates?

DateWhat happens
1 January 2027UK CBAM starts. If you will use actual emissions data, your suppliers' monitoring must be running from this date, because it cannot be reconstructed later.
By 1 January 2028HMRC's CBAM registration service opens
31 January 2028Registration deadline for importers who crossed the threshold during 2027 (normally 30 days after crossing it)
31 May 2028First return and payment, covering calendar year 2027
From 2028Quarterly returns. The transitional deadlines are 31 July, 29 September and 30 November 2028, and 28 February 2029. One legal analysis reads the November date as 29 November, so filing by then is safest.

How is the charge worked out?

The liability is the embedded emissions of the goods multiplied by the CBAM rate, minus any relief for carbon prices already paid abroad:

CBAM due = embedded emissions (tCO₂e) × CBAM rate (£ per tCO₂e) − Carbon Price Relief

The CBAM rate is based on the UK Emissions Trading Scheme price, adjusted for free allowances, and will be published quarterly from 1 January 2027. On 16 October 2026 HMRC published illustrative rates by sector, for example £9.69 per tonne of CO₂e for iron and steel and £9.79 for aluminium, together with indicative default values.

Actual emissions data or default values?

For each good, the importer chooses one of two routes:

  • Default values: one government value per product (commodity code), the same whatever the country of origin. Simple, but it may cost more than the true figure for a cleaner producer.
  • Actual emissions: the producer's own installation data, calculated under the UK method and checked by an independent verifier accredited by a body that is a full member of the Global Accreditation Cooperation. The verifier must be independent of the importer, the installation and its operator.

Examples of the indicative UK default values for steel, in tonnes of CO₂e per tonne of product:

ProductIndicative default value
Semi-finished steel (slab, billet)2.803 – 4.752
Hot-rolled coil2.582 – 4.675
Cold-rolled coil1.584 – 4.511
Hot-dip galvanised2.391 – 3.537
Rebar2.518 – 3.867
Stainless coil9.121

Ranges reflect different commodity codes within each product group. Figures as reported on 20 October 2026; check HMRC's final published values before relying on them.

Can carbon prices paid in China be deducted?

Possibly. Carbon Price Relief lets an importer deduct carbon costs already paid abroad under a qualifying scheme, capped at the CBAM charge. It needs evidence on a carbon pricing verification form completed by an independent verifier. The UK's draft list of qualifying schemes (August 2026) covers 16 countries, including China. Being on the list does not fix the amount of relief.

How is UK CBAM different from the EU CBAM?

UK CBAMEU CBAM
Start of charging1 January 20271 January 2026, after reporting from October 2023
How you payTax paid with each returnCertificates bought and surrendered each year
ExemptionUnder £50,000 of goods in 12 monthsUnder 50 tonnes a year
Default valuesOne per productBy product and country of origin
Indirect emissionsNot before 2029Included for some goods
First annual filing31 May 2028 (for 2027)30 September 2027 (for 2026)

A UK company that ships steel or aluminium goods on to EU customers can face questions under both systems. There is no link between the UK and EU schemes yet; the two sides are negotiating one.

What should importers ask Chinese suppliers now?

  1. Installation details: the name and address of the plant that actually made the goods, not the trading company that invoiced them.
  2. Production route: for example blast furnace or electric arc furnace for steel, and which precursor materials were bought in.
  3. Monitoring from 1 January 2027: whether the plant will record emissions under the UK or EU method from day one.
  4. Verification: whether the plant will accept an accredited verifier and share the report with you.
  5. Carbon price paid: evidence of any carbon cost under China's emissions trading scheme, if you want to claim relief.
  6. Contract terms: write data delivery, accuracy and cooperation with verifiers into your purchase contracts.

Expect data-quality problems. Under the EU system, one industry analyst said in April 2026 that "90% of the data from Chinese steel mills is incorrect", based on about 80 reports, and buyers are moving to fewer, better-prepared mills. Ask early, ask in Chinese, and check the numbers against the process before you rely on them.

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