UK Carbon Border Adjustment Mechanism secondary draft published: Key updates for importers

1. CBAM registration requirements

Businesses that meet or exceed the £50,000 threshold in 2027 must register by 31 January 2028 via their Government Gateway account. Registration will require:

• Business name and contact details
• Business address
• Business type
• EORI number and/or VAT registration number
• Date triggered the obligation
• Estimate weight of CBAM goods expected to be imported in the next 12 months

Early preparation will be critical to avoid compliance delays.

2. Accounting/payment periods

First payment deadline

The first UK CBAM payment will be due by 31 May 2028 , covering the initial accounting period (1 January 2027 to 31 December 2027).

Transition to quarterly reporting

From 2028 onwards, CBAM will move to a quarterly reporting cycle, with a gradual shift to a two month payment window, increasing the administrative pressure on obligated businesses. The draft proposes the following accounting/payment periods:

Importantly, separate consignments of the same CBAM good will require individual reporting, adding further complexity to the process.

3. Calculating UK CBAM liability

The calculation of a CBAM liability will involve determining the CBAM rate for each good and the Carbon Price Relief, where applicable. The calculation use the following formula:

CBAM Liability = UK CBAM Charge – Carbon Price Relief (CPR)

Where:

• UK CBAM Charge = Embodied emissions x CBAM rate
• Carbon Price Relief (CPR) = Embodied emissions x Effective carbon price already paid

Accurate emissions data will be essential for managing financial exposure.

4. CBAM rates

A sectoral average of free allocation adjustments will be applied to UK ETS prices to produce a single CBAM rate per sector. Annual adjustments using a ‘reduction factor’ will reflect the gradual phase out of UK ETS free allocations.

CBAM rates will be calculated and published on a quarterly basis from 1 January 2027.

The draft also proposes that a trial CBAM rate be published in Q4 2026 to allow businesses to prepare.

5. Carbon price relief

The Carbon Price Relief (CPR) mechanism allows importers to reduce their CBAM liability if goods have already been subject to a qualifying carbon pricing scheme.

This is particularly relevant for EU imports, which may benefit from complete or partial relief, helping prevent double carbon taxation.

Note that:

• Extensive evidence will have to be presented for CPR to be applied
• Goods subject to CPR will still require CBAM submissions and record keeping.

6. Actual/default values

Actual emissions data (current and precursor) will require independent verification by an accredited third party from the GACI. Further verification guidance will be set out by the government.

Default values have not yet been published and are expected in the final version of the secondary draft following consultation.

This omission limits business’ ability to model financial exposure and compliance costs.

7. Record-keeping obligations

The draft confirms extensive record-keeping requirements, including:

• Detailed import records for CBAM goods
• Evidence of prior carbon pricing
• Verification documentation

Strong internal compliance systems will be essential.

What does this mean for importers?

The UK CBAM is clearly progressing towards parliamentary adoption and implementation by 2027. However, the absence of key elements, such as default carbon values and confirmed CBAM rates creates uncertainty for businesses attempting to prepare their compliance and pricing strategies.

Companies importing CBAM-obligated goods should begin:

• Assessing supply chain emission visibility
• Preparing internal reporting systems
• Evaluating eligibility for Carbon Price Relief
• Using third-party financial forecasting services

Early action will reduce compliance risk and financial surprises.

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