Navigating the New UK Carbon Border Adjustment Mechanism (CBAM)

The landscape of UK imports is undergoing a major shift. To support global climate goals and ensure a level playing field for domestic industry, the UK government is introducing the Carbon Border Adjustment Mechanism (CBAM). This new measure is designed to tackle "carbon leakage" - preventing companies from moving production to countries with lower carbon pricing - and will officially come into effect on 1 January 2027.

Who will be affected?

CBAM will impact any business importing carbon-intensive goods into the UK (including Northern Ireland), as well as the non-EU producers who supply them. The regulations specifically target six key sectors:

Aluminium
Cement
Fertilisers
Hydrogen
Iron & Steel

Why does CBAM matter?

Beyond environmental impact, CBAM is an industrial competitiveness tool. By equalising carbon costs between domestic and foreign producers, it gives UK industries the confidence to invest in low-carbon technologies.

For your business, this means a shift in procurement strategies, supply chain management, and corporate reporting.

Key Compliance Requirements.

While the full implementation is a few months away, the initial setup will require significant work for importers and their customs representatives.

The £50,000 Threshold: Importers must register for CBAM if they import more than £50,000 of in-scope goods annually. This is determined by a forward-looking test (total value over the next 30 days) or a backward-looking test (a review of the previous 12 months).
Registration: Registration will be managed through the Government Gateway using the dedicated HMRC CBAM service.
Reporting Cycles: The first accounting period will cover the full year of 2027, with the return due five months after the period ends. Following this, the system will move to a quarterly reporting cycle.
Data Requirements: Returns will require detailed information, including commodity codes, the net weight of goods in kilograms, and the emissions intensity (the greenhouse gases "embodied" in the goods). If actual emissions data is unavailable, default values must be used.

Complexities: Special Procedures and Reliefs

The rules for CBAM can be complex, particularly when goods are processed or returned.

Special Customs Procedures: Liability may still arise even if a CBAM good is processed into a non-CBAM good under procedures like Inward Processing (IP) or storage.
Exemptions: There are specific exemptions for goods originating from the UK Continental Shelf (UKCS) and for those eligible for Return Goods Relief (RGR), provided they are documented correctly.
Outward Processing (OP): If a UK-origin CBAM good is processed abroad and re-imported, any carbon price already paid in the UK can be used to adjust the final CBAM liability downward.

Next steps for your business

At Bethan Customs Consultancy, we're all about making customs feel clear and manageable. CBAM is complex, but it doesn't have to be overwhelming. We'll help you understand what it means for your business, identify where it applies, and put a practical plan in place so you can move forward with confidence.

As we approach the 2027 deadline, we recommend all importers take the following actions:

Review your Commodity Codes: Identify which of your imported goods fall within the scope of the affected sectors.
Assess your Supply Chain: Identify which of your products are carbon-intensive and where they originate.
Evaluate your Systems: Ensure your reporting and data collection systems are prepared to track emissions intensity and carbon prices paid abroad.

If you’d like to chat about this further, get in touch at hello@bethancc.com.