Simarco explains CBAM: The Next Compliance Change Businesses Cannot Ignore

Carbon is becoming both a compliance requirement and a direct cost consideration when moving goods across international borders – and for UK importers, an important change is getting closer.

From 1 January 2027, the UK’s Carbon Border Adjustment Mechanism (CBAM) will introduce a carbon-based tax on imports of specified carbon-intensive goods. Core legislation and initial guidance are now available, although the 2027 sector rates and government default emissions values are still to be published.

That makes the remainder of 2026 an important preparation period: businesses need to establish whether their goods are in scope, what information will be required and what the potential cost could be.

At Simarco International, our in-house customs specialists work with businesses every day to navigate changing international trade requirements, from customs declarations and commodity classification to documentation and wider customs compliance. With UK CBAM approaching, we’re helping businesses understand what the changes could mean in practice and where they need to start preparing.

What is CBAM and why does it matter?

CBAM is designed to address carbon leakage. UK manufacturers can face costs associated with their emissions, while comparable goods made overseas may come from countries where carbon pricing is lower or does not apply in the same way.

The mechanism is intended to place a more comparable carbon price on certain imported goods. Classification, origin, customs value and duty treatment will remain important, but production emissions may now create a direct tax liability.

Businesses familiar with EU CBAM should note that the UK mechanism is separate, with its own scope, thresholds and reporting rules.

From 1 January 2027, UK CBAM will apply to specified goods within five sectors:

Aluminium | Cement | Fertiliser | Hydrogen | Iron and steel

The sector description alone is not enough to determine whether a product is covered. Scope is defined by commodity code, and some goods within the five sectors are specifically excluded. Importers should therefore check their products against HMRC’s latest commodity-code list and continue to monitor the UK Tariff for changes.

What will UK CBAM mean for importers?

In most cases, the liable person will be the UK importer in whose name, or on whose behalf, the customs declaration is made. An agent may assist, but registration and payment responsibility remain with the importer.

Registration is triggered when the customs value of in-scope goods reaches the £50,000 threshold under either a forward-looking 30-day test or a backward-looking 12-month test.

Importantly, the £50,000 figure is a registration threshold based on the value of relevant imports. It is not the CBAM charge, a cap on liability or a tax-free allowance. Businesses below the threshold will still need appropriate records to demonstrate why they are not required to register.

The CBAM charge itself will not be calculated as a percentage of the customs value. Broadly, the calculation will be:

Imported embodied emissions × applicable sector rate – eligible Carbon Price Relief

Imported embodied emissions will generally be determined by multiplying the emissions intensity of the goods by their weight. The government will publish a rate for each sector at the beginning of every quarter, based on the effective UK carbon price and adjusted to reflect free allowances under the UK Emissions Trading Scheme.

To put that into context, if a business imported 100 tonnes of an affected product with embodied emissions of 2 tonnes of CO₂ equivalent per tonne, and the applicable CBAM rate were hypothetically £50 per tonne of CO₂ equivalent, the initial charge would be:

100 tonnes × 2 tCO₂e × £50 = £10,000

The £50 rate in this example is purely illustrative and is not a forecast of the rate that will apply in 2027. Any eligible Carbon Price Relief would then be deducted.

Even so, the example demonstrates why CBAM could affect landed cost, margins, pricing decisions and supplier selection – not simply create another reporting obligation.

The data behind the CBAM charge

For many importers, one of the biggest challenges may not be calculating the eventual liability. It could be obtaining the information needed to calculate it.

Importers will be able to use verified actual emissions data from the overseas producer or government-set default values. If actual data is unavailable or lacks the required verification, a default must be used. At launch, UK CBAM will focus on direct production emissions, including relevant precursor emissions for certain complex goods.

Where goods have been subject to a qualifying overseas carbon pricing scheme, Carbon Price Relief may reduce the UK liability. Appropriate evidence and verification will be required; it will not be enough simply to state that a carbon price was paid.

This makes CBAM as much a supply-chain data challenge as a tax and compliance change.

Information may need to come from manufacturers several tiers back in the supply chain, which means businesses need to consider now whether their suppliers can provide the required emissions and carbon-pricing information.

Why preparation needs to begin in 2026

The first UK CBAM return and payment will be due by 31 May 2028 and will cover relevant imports made during 2027.

That later payment date should not be mistaken for a later start date.

The goods, values, weights and supporting information become relevant from 1 January 2027. A business that discovers part-way through 2027 that it needs verified emissions or carbon-pricing evidence may find itself trying to obtain information retrospectively from overseas manufacturers.

CBAM could also involve several areas of a business, including procurement, finance, sustainability, logistics and customs. Establishing responsibilities before the mechanism begins could therefore make the transition considerably easier.

For importers, preparation during 2026 should include:

• Identifying potentially affected imports using commodity codes, origin, customs value and net weight.
• Testing historical and forecast import values against the £50,000 registration rules.
• Modelling possible CBAM exposure using a range of emissions intensities and carbon-rate assumptions until the official figures are published.
• Asking overseas suppliers whether they can provide actual emissions data, verification evidence and information about any qualifying carbon price.
• Deciding who will own CBAM internally and building the required data into procurement, customs, finance and record-keeping processes.
• Reviewing supply contracts and pricing arrangements to establish who will bear CBAM-related costs and verification expenses.

The aim should be to build CBAM into existing import processes from the outset rather than trying to address the requirements retrospectively.

Preparing for the next change in international trade

International trade compliance increasingly depends on reliable supply-chain information as well as an accurate customs declaration.

For businesses importing goods that could fall within UK CBAM, the message is straightforward: establish the scope, understand the possible cost and start the supplier-data conversation before 1 January 2027.

Preparing early gives businesses more time to understand their exposure, engage with suppliers and incorporate the new requirements into their existing processes before CBAM takes effect.

The legislation starts in 2027. The financial and operational preparation starts now.

Useful government guidance

HMRC: Prepare for the Carbon Border Adjustment Mechanism – Prepare for the Carbon Border Adjustment Mechanism (CBAM) – GOV.UK

HMRC: Commodity codes within scope of UK CBAM – Check which goods are in scope of Carbon Border Adjustment Mechanism (CBAM) – GOV.UK