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UK CBAM 2027 for SME Manufacturers: The Compliance, Cost and Supplier-Data Guide

Writer: CBAM Research Team
CBAM Research Team
1 day ago
32 min read

CBAM Journal Research, Sekason Research Limited. Published October 2026.

Data verified: 28 October 2026 · Next review trigger: 13 November 2026 (reported close of feedback on the HMRC technical guidance)

As at 28 October 2026. Jurisdiction: UK CBAM only.


Disclaimer

1. Information only. This report is published by Sekason Research Limited (CBAM Journal) for general information and research purposes. It is not legal, tax, customs, financial, accounting or regulatory advice, and it does not create an adviser-client relationship between Sekason Research Limited and any reader.

2. No reliance. The report reflects sources available as at 28 October 2026. Several inputs are provisional, including the illustrative rates, the draft default values and the technical guidance, and they may change. The legislation and the HMRC publications prevail over any statement in this report. Readers must obtain advice from a suitably qualified professional on their own circumstances before acting.

3. Accuracy. Reasonable care has been taken in preparing this report. Sekason Research Limited gives no representation or warranty, express or implied, as to its accuracy, completeness, currency or fitness for a particular purpose. Third-party sources are cited as published and are not controlled or independently guaranteed by Sekason Research Limited.

4. Illustrative figures. Worked examples, scenarios and cost figures are illustrative and are not forecasts. Actual UK CBAM liability depends on official rates, the emissions route used, any carbon price relief and the facts of each importer.

5. Limitation of liability. To the fullest extent permitted by law, Sekason Research Limited and its directors, employees and contributors accept no liability for any loss or damage, whether direct, indirect or consequential, including loss of profit, arising from the use of, or reliance on, this report. Nothing in this disclaimer excludes or limits liability for death or personal injury caused by negligence, for fraud or fraudulent misrepresentation, or for any liability that cannot lawfully be excluded or limited.

6. Third-party material. References and links to third-party websites and publications are for convenience and do not imply endorsement. Sekason Research Limited is not responsible for their content.

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8. No duty to update. Sekason Research Limited is not obliged to update this report after its publication date. The verification line states the date of the last check.

9. Governing law. This disclaimer and any dispute arising from the use of this report are governed by the laws of England and Wales, and the courts of England and Wales have jurisdiction.

Read the complete disclaimer here; https://www.cbamjournal.com/disclaimer


CBAM Journal cover with UK flag, steel coils and cargo ship; headline UK CBAM 2027 for SME Manufacturers, 31 January 2028.

1. Executive Summary

As at October 2026, UK CBAM requires a business to register once it expects £50,000 or more of CBAM goods within 30 days or has imported that value over the previous 12 months, and HMRC guidance states a business liable during 2027 must register by 31 January 2028. HMRC's illustrative Q1 2027 UK CBAM rates, published on 16 October 2026, range from £1.45 per tCO₂e (fertilisers) to £9.79 per tCO₂e (aluminium), create no liability, and are due to be replaced by official rates before the end of 2026. Under UK CBAM, importers without verified supplier data use HMRC's draft default values (for example 3.468 tCO₂e per tonne for hot-rolled coil, CN 72083900), and the first return and payment for 2027 imports are due on 31 May 2028.


This UK CBAM compliance guide for manufacturers is a decision guide for UK manufacturing SMEs that import aluminium, cement, fertilisers, hydrogen, iron or steel as production inputs. It shows how to screen purchases against the £50,000 registration threshold, identify the liable importer, choose between default and verified supplier emissions, and build a reproducible cost estimate from sourced inputs.


Four inputs are provisional: the rates are illustrative until official Q1 2027 rates are published, the default values notice is a draft, feedback on the technical guidance is reported to close on 13 November 2026, and no UK–EU exemption for EU-origin goods is in force. Table 1 labels each item as enacted law, official guidance, draft or open, so the buyer can see what to act on today and what to hold. Dates in NOW WHAT lines that are not set by a regulation are recommended internal deadlines.


Table 1. Status register for UK CBAM, as at October 2026

Item

Status

Basis

Finance Act 2026 Part 5 (ss.142–158)

Enacted law

Charge applies to imports on or after 1 January 2027 (s.158(1))

SI 2026/802, SI 2026/809, SI 2026/995

Made; in force 1 January 2027

legislation.gov.uk

Illustrative Q1 2027 rates

Official guidance; no liability

HMRC, 16 October 2026

Official Q1 2027 rates

Due

HMRC: before the end of 2026

Default values notice

Draft

Period 1 January 2027 to 31 December 2028

Technical guidance on emissions

Open to feedback

Feedback reported to close 13 November 2026

Registration facility

HMRC guidance states it opens 1 January 2028

Register by 31 January 2028 if liable during 2027

UK–EU link and exemption for EU-origin goods

Under negotiation

No regulations under s.156 reported as laid at 13 October 2026

Penalty percentages and interest rates

Not published

Only the £500 record-keeping penalty is published


2. Regulatory Context


2.1 The statutory framework

  • FINDING: As at October 2026, Finance Act 2026 s.158(1) applies UK CBAM to goods imported on or after 1 January 2027, and SI 2026/802, SI 2026/809 and SI 2026/995 take effect on the same date.

  • SO WHAT: UK CBAM liability attaches at import from the first 2027 shipment, whether or not the HMRC registration facility has opened.

  • NOW WHAT: Have the import ledger ready to record every in-scope shipment by 1 January 2027.


Finance Act 2026 (c.11) Part 5, ss.142–158, creates UK CBAM. Section 143(1) charges CBAM on the emissions embodied in a CBAM good when it is imported, s.143(2) defines CBAM goods by reference to Schedule 16, and s.146(1) makes the importer the liable person. Section 151 covers administration and enforcement, and section 152 covers criminal offences.


Three statutory instruments supply the operating rules. SI 2026/802 sets registration information, records and returns. SI 2026/809 sets the inputs to the CBAM rate calculation and how carbon price relief is determined. SI 2026/995 sets emissions monitoring and verification. SI 2026/809 states it was laid for approval by resolution of the House of Commons within twenty-eight days, and CBAMGuide reports a Commons approval on 14 October 2026. Secondary sources report two further instruments, SI 2026/830 (transitory provision) and SI 2026/994 (the appointed day for interest), but this report describes neither in detail.


The charge, the importer rule and the commencement date are in the Act. Rates, default values and technical guidance are HMRC publications that can change.


Table 2. Instrument register for UK CBAM, as at October 2026

Instrument

Function

Status

In force

Finance Act 2026 (c.11) Part 5, Schedules 16–19

Charge, goods, importer liability, administration, offences

Enacted

Imports on or after 1 January 2027

SI 2026/802

Registration information, records, returns

Made 13 July 2026

1 January 2027

SI 2026/809

Rate calculation, carbon price relief

Made 13 July 2026; laid for approval by Commons resolution

1 January 2027

SI 2026/995

Emissions and verification

Made 8 September 2026

1 January 2027


2.2 The 16 October 2026 package

  • FINDING: As at October 2026, HMRC's UK CBAM publications of 16 October 2026 set draft default values for 1 January 2027 to 31 December 2028, with a 10% markup on all sectors except fertilisers.

  • SO WHAT: A manufacturer can model 2027 UK CBAM costs as a range, but cannot fix a figure until HMRC publishes official Q1 2027 rates.

  • NOW WHAT: Budget on a range and replace it with official rates as soon as HMRC publishes them, before 1 January 2027.


On 16 October 2026 HMRC published illustrative rates with a worked example, a draft default values notice, technical guidance on monitoring, verification and reporting, and an updated policy summary. HMRC states the illustrative rates are not forecasts and create no tax liability. The default values notice is published in draft. Official Q1 2027 rates are due before the end of 2026, and rates are then published by the start of each quarter.


The technical guidance matters most for suppliers. It sets out how a producing installation monitors emissions and arranges verification. Feedback is reported to close on 13 November 2026, and HMRC may update the guidance after that.


Table 3. UK CBAM publications of 16 October 2026, as at October 2026

Publication

Binding status

Expected change

Illustrative CBAM rates and worked example

Guidance; creates no liability

Replaced by official Q1 2027 rates before the end of 2026

Default values notice (draft)

Draft

Period 1 January 2027 to 31 December 2028; per-country values from 2029

Technical guidance on monitoring, verification and reporting

Guidance

Feedback reported to 13 November 2026; may be updated

CBAM policy summary

Guidance

Updated 16 October 2026


2.3 UK–EU linkage and EU-origin goods

  • FINDING: As at October 2026, no exemption for EU-origin goods is in force under UK CBAM on 1 January 2027, and the Finance Act 2026 s.156 power to exclude emissions embodied in goods from a linked territory had not been used by 13 October 2026, according to CBAMGuide.

  • SO WHAT: A manufacturer sourcing EU-origin steel, aluminium or cement carries the same UK CBAM exposure on 1 January 2027 as one sourcing from any other country.

  • NOW WHAT: Model EU-origin imports as in scope in every cost estimate prepared by 31 December 2026.


Section 156 of the Finance Act 2026 gives a power to make regulations excluding the emissions embodied in goods that originate from a country or territory with a linked emissions trading scheme. According to CBAMGuide, the Prime Minister told the Commons on 12 October 2026 that a UK–EU summit will take place in Brussels on 20 November 2026, with a deal on emissions trading on the agenda. A UK–EU Common Understanding of 19 May 2025 refers to a mutual CBAM exemption for originating goods subject to each side's legal requirements, according to ccs.tw.


An announcement on 20 November 2026 would not by itself exempt any goods. The exemption needs regulations under s.156, and the EU side has its own steps, which ccs.tw lists as Council adoption, European Parliament consent and an EU delegated act with a scrutiny period. The date any exemption took effect would decide which 2027 imports it covered.


3. Compliance Obligations

UK CBAM places eight duties on the importer, running from the charge on imports on or after 1 January 2027 to the return and payment due on 31 May 2028.


Table 4. Core UK CBAM duties for an importer, as at October 2026

Duty

Instrument

Date

Pay the charge on imported CBAM goods

Finance Act 2026 s.143(1)

Imports on or after 1 January 2027

Importer is liable

Finance Act 2026 s.146(1); HMRC guidance updated 7 October 2026

From 1 January 2027

Register when the £50,000 threshold is met

HMRC policy summary

Within 30 days of liability; by 31 January 2028 for 2027 liability

Keep import records

SI 2026/802 regs 5, 6, 11

From 1 January 2027; six years

Use a default value or verified emissions

SI 2026/995 regs 4, 9(1), 12(1)

Calendar-year monitoring period

File a return with a truth declaration

SI 2026/802 reg 10(2)

31 May 2028 for 2027

Pay

HMRC policy summary

31 May 2028 for 2027

Claim carbon price relief (optional)

SI 2026/809 regs 5, 9(1)

With the return


3.1 Is this good in scope?

  • FINDING: As at October 2026, UK CBAM covers goods specified by Schedule 16 of the Finance Act 2026 (s.143(2)), and HMRC's policy summary excludes CN 3105 60 00 and scrap in aluminium and iron and steel codes.

  • SO WHAT: A sector label does not decide coverage, so a wrong commodity code leaves either an unreported liability or wasted compliance effort.

  • NOW WHAT: Match every purchased SKU to its 8-digit commodity code against the official list by 31 December 2026.


UK CBAM covers five sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel. Coverage is set by commodity code, not by sector name. According to Clifford Chance, glass and ceramics were dropped from the scope in the October 2024 response and may be added after 2027. According to Fuels Industry UK, refined petroleum products are not being added.


Whether downstream or derived goods, such as fasteners, fall in scope for 2027 is not stated in HMRC's published guidance. A manufacturer that imports components, not raw inputs, should check each code against Schedule 16.


Table 5. Scope screening matrix (structure and example rows), as at October 2026

SKU

8-digit code

In scope?

Source to check

Hot-rolled coil

72083900

Listed in the draft default values notice

Schedule 16

Unalloyed unwrought aluminium

76011010

Listed in the draft default values notice

Schedule 16

Portland clinker

25231000

Listed in the draft default values notice

Schedule 16

Phosphorus and potassium fertiliser

3105 60 00

Excluded (HMRC policy summary)

Schedule 16

Your SKU

[your 8-digit code]

Y / N / check

Schedule 16 and HMRC sector pages


3.2 Who is the liable importer?

  • FINDING: As at October 2026, Finance Act 2026 s.146(1) makes the importer liable for UK CBAM from 1 January 2027, and HMRC guidance updated on 7 October 2026 states that a person whose declaration someone else completes is still classed as the importer.

  • SO WHAT: If you are the person named on the declaration, a freight forwarder or customs broker filing it does not take the UK CBAM liability, so the charge lands on the manufacturer.

  • NOW WHAT: Check the name and EORI on your import declarations and send delivered-duty-paid arrangements for legal review by 31 December 2026.


Where customs duty is payable, HMRC guidance identifies the importer as the person named on the import declaration. Where no duty is payable, the importer is the person importing the goods. According to Clifford Chance, a tax agent can submit returns, but liability stays with the importer.

HMRC guidance does not address delivered-duty-paid purchases or a forwarder named as importer for duty purposes. A manufacturer buying on those terms should settle the position in writing before the first 2027 shipment.


Table 6. Importer role scenarios, as at October 2026

Scenario

Position in HMRC guidance

Action

You file your own declaration

You are the importer

Keep CBAM records

A broker files on your behalf

You are still classed as the importer

Confirm what the broker will record

A forwarder is named as importer

Not addressed in HMRC guidance

Take legal advice before the first shipment

Delivered duty paid

Not addressed in HMRC guidance

Take legal advice before the first shipment

3.3 The £50,000 threshold and registration

  • FINDING: As at October 2026, HMRC's UK CBAM policy summary sets a £50,000 registration threshold on customs value, which SI 2026/802 reg 3(2) defines as the value determined for customs purposes, and a business liable during 2027 must register by 31 January 2028.

  • SO WHAT: UK CBAM liability can begin in 2027 before the registration facility opens, and HMRC can register an importer compulsorily and assess the tax due.

  • NOW WHAT: Importers expecting £50,000 or more of CBAM goods within 30 days must start the monthly test on 1 January 2027 and register by 31 January 2028.


HMRC guidance sets two tests. The forward test asks whether the business expects £50,000 or more of CBAM goods within the next 30 days. The backward test, applied on the first day of each month, looks at the previous 12 months. Imports before 1 January 2027 do not count, and the earliest liability date applies. HMRC guidance states a business has 30 days to register from the day it becomes liable, with the first-year deadline of 31 January 2028. HMRC guidance also states registration opens on 1 January 2028.


For the threshold, the value of a good is its customs value (SI 2026/802 reg 3(2)). HMRC guidance excludes some imports from the count: UK-origin goods re-imported unchanged, returned goods relief within three years, temporary admission with full relief, and special customs procedures unless the goods are released into free circulation with duties due.


Table 7 shows how the rolling test works on an illustrative pattern. All figures are Illustrative: 60 tonnes imported on 15 January, 15 April, 15 July and 15 October 2027, at £600 per tonne customs value (£36,000 per shipment).

Table 7. Threshold schedule, Illustrative import pattern, as at October 2026

Test date

Next 30 days (Illustrative)

Previous 12 months of 2027 imports (Illustrative)

Result

1 January 2027

£36,000

£0

Below £50,000

1 February 2027

£0

£36,000

Below £50,000

1 March 2027

£0

£36,000

Below £50,000

1 April 2027

£36,000

£36,000

Below £50,000

1 May 2027

£0

£72,000

Backward test met

3.4 Records

  • FINDING: As at October 2026, SI 2026/802 regs 5, 6 and 11 require UK CBAM records in writing for six years, and HMRC guidance states a fixed penalty of £500 may apply for not keeping records.

  • SO WHAT: Record-keeping starts with the first 2027 import, before registration, so a gap in January 2027 cannot be repaired by registering later.

  • NOW WHAT: Add the CBAM record fields to the import ledger by 1 January 2027.


For each CBAM good, the records cover the 8-digit commodity code and description, import date, value, weight and place of origin. HMRC's "Keeping records for CBAM" guidance (published 16 July 2026) states weight is net mass in kilograms, excluding packaging, to up to six decimal places. It also requires evidence for any exemption relied on, such as returned goods relief or temporary admission.

Regs 5 and 10 of SI 2026/802 are subject to amendment by SI 2026/995 reg 17, so the field list may change before 1 January 2027.


3.5 Returns, truth declaration and payment

  • FINDING: As at October 2026, HMRC's UK CBAM policy summary sets the first accounting period as 1 January to 31 December 2027, with the return and payment due on 31 May 2028.

  • SO WHAT: The 2027 charge falls due as one payment in May 2028 on up to 12 months of imports, which makes it a cash-planning item.

  • NOW WHAT: Accrue the estimated UK CBAM charge monthly from 1 January 2027 to cover the payment due on 31 May 2028.


SI 2026/802 reg 10(2) requires a declaration that the return is true and accurate to the best of the person's knowledge. The return lists, for each CBAM good, the commodity code, weight, any carbon price relief amount and place of origin. HMRC's policy summary states that nil returns are required.


4. Key Dates and Deadlines

4.1 From now to the first return

  • FINDING: As at October 2026, the UK CBAM return and payment for 2027 imports are due on 31 May 2028, and the milestones before that date begin with official Q1 2027 rates due before 31 December 2026.

  • SO WHAT: Three open items, the technical guidance, the official rates and the UK–EU position, may resolve before the first import.

  • NOW WHAT: Complete the pre-commencement actions in Table 18 by 31 December 2026.

Table 8. UK CBAM timeline to the first return, as at October 2026

Date

Event

Status

13 November 2026

Feedback on technical guidance closes

Reported

20 November 2026

UK–EU summit in Brussels

Reported (CBAMGuide)

Before 31 December 2026

Official Q1 2027 CBAM rates

HMRC: due

1 January 2027

UK CBAM commences; record-keeping, threshold tests and the first accounting period start

Enacted (s.158(1))

By 1 April, 1 July, 1 October 2027

Rates published for each quarter

HMRC guidance

31 December 2027

First accounting period ends

HMRC policy summary

1 January 2028

Registration opens; accounting periods become quarterly

HMRC policy summary

31 January 2028

Register by this date if liable during 2027

HMRC policy summary

31 May 2028

2027 return and payment due

HMRC policy summary

4.2 After the first return

  • FINDING: As at October 2026, HMRC's UK CBAM policy summary sets quarterly deadlines of 31 July 2028, 29 September 2028, 30 November 2028 and 28 February 2029.

  • SO WHAT: Filings rise from one a year to four, which quadruples the reconciliation workload for a business without a dedicated customs team.

  • NOW WHAT: Design a monthly close process for CBAM data by 31 December 2027 (recommended internal deadline).


From 1 January 2028 accounting periods are quarterly. From 2029 the draft default values notice moves to one default value per good per country, and HMRC will review the markup.


5. Financial Exposure and Risk

5.1 How the CBAM rate is built

  • FINDING: As at October 2026, HMRC's illustrative UK CBAM rates are built from a Q3 2026 average UK ETS price of £58.15, and give £9.69 per tCO₂e for steel.

  • SO WHAT: The rate applies to tonnes of embodied CO₂e, not tonnes of product, and moves each quarter with the UK ETS price, so a cost model fixed in October 2026 goes out of date every quarter.

  • NOW WHAT: Rebuild the cost model each quarter when HMRC publishes the new rate, starting by 1 April 2027.


HMRC's rate is the average UK ETS auction clearing price multiplied by one minus the product of the baseline free allocation percentage and a reduction factor (Finance Act 2026 s.149(3), with SI 2026/809 regs 3 and 4 setting the inputs).

For 2027 the reduction factor is 97.5% in all five sectors. The only published worked example is cement. With a baseline of 87.1%, £58.15 × [1 − (0.871 × 0.975)] works out at £8.77. 

HMRC publishes £8.78 and attributes the difference to rounding. Free allocation percentages for the other four sectors are not published on the HMRC illustrative rates page.


Table 9. UK CBAM rate formula inputs, as at October 2026

Input

Value

Source

Average UK ETS auction price, Q3 2026

£58.15 per tCO₂e

HMRC illustrative rates, 16 October 2026

Reduction factor, 2027

97.5% (all five sectors)

HMRC illustrative rates

Baseline free allocation, cement

87.1%

HMRC illustrative rates

Baseline free allocation, other sectors

Not published on the HMRC page

—


Table 10. Illustrative Q1 2027 UK CBAM rates (illustrative as at October 2026; no liability)

Sector

Illustrative rate (£ per tCO₂e)

Iron and steel

9.69

Aluminium

9.79

Cement

8.78

Fertilisers

1.45

Hydrogen

9.24

5.2 Default values or verified supplier emissions

  • FINDING: As at October 2026, SI 2026/995 reg 4 sets emissions at weight multiplied by the default value where verified data is missing, and the draft default values notice lists 3.468 tCO₂e per tonne for hot-rolled coil.

  • SO WHAT: The route is chosen supplier by supplier, and UKAS had accredited no UK CBAM verifiers at 8 October 2026 according to CBAMGuide, so verified data may be scarce at the start of 2027.

  • NOW WHAT: Ask each supplier whether calendar-year verified data will exist, and decide the route per supplier before 1 January 2027.


The verified route needs the producing installation to monitor emissions over a calendar year (SI 2026/995 reg 9(1)) and have them verified by an independent verifier (reg 12(1)). According to CBAMGuide, citing a UKAS bulletin of 8 October 2026, UKAS had accredited no UK CBAM verifiers at that date. The draft notice states a 10% markup on defaults for all sectors except fertilisers. A manufacturer should not add the markup a second time to a listed value.


HMRC's guidance does not describe a benchmark route as a liability input. The nearest benchmark-type figure is the baseline free allocation percentage inside the rate itself.


Table 11. Draft UK CBAM default values, extract (draft; as at October 2026)

Sector

CN code

Product

tCO₂e per tonne

Iron and steel

72083900

Hot-rolled coil

3.468

Iron and steel

72142000

Ribbed bars

3.040

Iron and steel

72031000

Direct reduced iron

1.149

Iron and steel

72091790

Cold-rolled

2.648

Iron and steel

72104900

Galvanised

3.049

Iron and steel

72181000

Stainless ingots

3.587

Aluminium

76011010

Unalloyed unwrought

2.058

Cement

25231000

Clinker

1.433

Cement

25232900

Portland, other

1.375

Cement

25233000

Aluminous

2.075

Fertilisers

28080000

Nitric acid

2.048

Hydrogen

28041000

Hydrogen

28.378

The notice contains further rows, including stainless products, that this extract omits.


5.3 Carbon price relief

  • FINDING: As at October 2026, SI 2026/809 reg 5 lets an importer claim UK CBAM carbon price relief for imports from 1 January 2027, capped at the CBAM liability, and a provisional list of 16 qualifying schemes was reported on 27 August 2026.

  • SO WHAT: Relief reduces the charge only where a verifier has completed a carbon pricing verification form (reg 9(1)), so an unevidenced foreign carbon cost earns nothing.

  • NOW WHAT: Collect supplier evidence of any carbon price paid on each product by 31 December 2027, so it is on file before the 31 May 2028 return.


According to CBAMGuide, the provisional list includes the EU ETS, but emissions covered by free allocation do not qualify. According to Khaitan & Co (18 September 2026), HM Treasury added India's Carbon Credit Trading Scheme to the indicative list, covering iron and steel, cement and aluminium but not fertilisers or hydrogen. The official list is a separate HMRC publication, and the provisional list is revisable. SI 2026/809 reg 15 requires relief records for six years from the day after the end of the accounting period.


5.4 Penalties and interest

  • FINDING: As at October 2026, the only UK CBAM penalty amount HMRC has published is the £500 fixed penalty for not keeping records.

  • SO WHAT: The cost of a late registration, late return or inaccurate return cannot be quantified from published sources, so the exposure is open-ended.

  • NOW WHAT: Treat record accuracy as the control and check HMRC's penalty pages for CBAM rates before the 31 May 2028 return.


HMRC's policy summary states HMRC will extend its existing powers and penalties to CBAM where appropriate, and that criminal offences apply to fraudulent evasion and deliberate misstatement. HMRC can also register an importer compulsorily and assess tax due. According to Compliance Gate and KPMG, Finance Act 2009 ss.101–102 apply interest to CBAM through SI 2026/994, but HMRC has published no CBAM interest rate.


Table 12. UK CBAM penalties and interest, as at October 2026

Item

Published amount

Not keeping records

£500 fixed penalty (HMRC "Keeping records for CBAM")

Failure to register or registering late

HMRC guidance refers to a possible penalty; no rate published

Late return, late payment, inaccuracy

No rate published

Interest

Applied through SI 2026/994 according to secondary sources; no rate published

Fraudulent evasion, deliberate misstatement

Criminal offences (HMRC policy summary)

5.5 What official cost evidence exists

  • FINDING: As at October 2026, the only UK CBAM importer cost examples published are consultancy modelling by Allied Group, which put a 3,000 tonne a year steel importer at about £1.2m, reported by Business Eye on 17 March 2026.

  • SO WHAT: No official SME-level or sector-level cost estimate was available, so the buyer must calculate their own exposure.

  • NOW WHAT: Run the Section 7.3 method on your own import tonnages by 31 December 2026.


Allied Group's other examples were cement at 2,500 tonnes a year (about £1m), fertiliser at 1,500 tonnes a year (£600,000 to £675,000) and a mid-sized importer at 5,000 tonnes a year (about £2m). The modelling used EU default values as a proxy and pre-dates the 16 October 2026 UK publications. It implies about £400 per tonne of steel. On HMRC's illustrative steel rate and the draft hot-rolled coil default, the charge is about £33.60 per tonne (Section 7.3), roughly one twelfth of that figure. Treat the Allied examples as a consultancy scenario, not a UK CBAM estimate.


6. Sector-Specific Impact Analysis

Across the five sectors the illustrative rate spans only £1.45 to £9.79 per tCO₂e, but the illustrative charge per tonne of product spans about £2.97 to £262.21, because default emissions per tonne vary far more than the rate.

Table 13. Sector matrix, UK CBAM (illustrative charge per tonne = draft default value × illustrative rate, before relief; as at October 2026)

Sector

Illustrative rate (£/tCO₂e)

Example default (tCO₂e/t)

Illustrative charge per tonne

Evidence gap

Iron and steel

9.69

Hot-rolled coil 3.468

£33.60

Table end and stainless rows partial

Aluminium

9.79

CN 76011010: 2.058

£20.15

One default row read

Cement

8.78

Clinker 1.433

£12.58

Baseline published for cement only

Fertilisers

1.45

Nitric acid 2.048

£2.97

One default row read

Hydrogen

9.24

28.378

£262.21

One default row read

6.1 Iron and steel

  • FINDING: As at October 2026, the UK CBAM illustrative rate for iron and steel is £9.69 per tCO₂e, and the draft default for hot-rolled coil is 3.468 tCO₂e per tonne.

  • SO WHAT: On those inputs hot-rolled coil carries an illustrative charge of about £33.60 per tonne, and ribbed bars about £29.46 per tonne, so the product code moves the cost more than the sector rate does.

  • NOW WHAT: Map every steel SKU to its default value row by 31 December 2026.


Scrap is excluded. According to GMK Center, the highest default value is 9.121 tCO₂e per tonne for stainless coils. According to CBAMGuide, the UK imported 9.16 million tonnes of steel in 2025.


6.2 Aluminium

  • FINDING: As at October 2026, the UK CBAM illustrative rate for aluminium is £9.79 per tCO₂e, the highest of the five sectors, and the one draft default read is 2.058 tCO₂e per tonne for CN 76011010.

  • SO WHAT: That gives an illustrative charge of about £20.15 per tonne for unalloyed unwrought aluminium.

  • NOW WHAT: Confirm the default row for each purchased aluminium code by 31 December 2026.


ALFED's chief executive Nadine Bloxsome said industry needs clarity, practical guidance and lead time (26 August 2026). ALFED lists default values, verification and recognition of overseas carbon costs as open points. According to CBAMGuide, emissions from smelter electricity are not priced at launch. CBAMGuide also estimates about 1.5 tCO₂ per tonne direct emissions, which does not match the 2.058 draft default.


6.3 Cement

  • FINDING: As at October 2026, the UK CBAM illustrative rate for cement is £8.78 per tCO₂e on a baseline free allocation of 87.1%, and the draft default for clinker is 1.433 tCO₂e per tonne.

  • SO WHAT: Clinker carries an illustrative charge of about £12.58 per tonne before relief, matching the figure CemNet reported on 19 October 2026.

  • NOW WHAT: Reproduce the cement worked example in your own cost model by 31 December 2026.


Cement is the only sector with a published worked example.

CemNet reported about £12.07 per tonne for non-white Portland cement, which equals the draft default of 1.375 multiplied by £8.78. The Mineral Products Association's Dr Diana Casey said in February 2026 that importers lacked clarity on default values.


6.4 Fertilisers

  • FINDING: As at October 2026, the UK CBAM illustrative rate for fertilisers is £1.45 per tCO₂e, the lowest of the five sectors, and no markup applies to fertiliser defaults.

  • SO WHAT: At the draft nitric acid default of 2.048 tCO₂e per tonne, the illustrative charge is about £2.97 per tonne, so the exposure is small unless volumes are large.

  • NOW WHAT: Screen purchases against excluded CN 3105 60 00 before modelling, by 31 December 2026.


6.5 Hydrogen

  • FINDING: As at October 2026, the UK CBAM illustrative rate for hydrogen is £9.24 per tCO₂e, and the draft default for CN 28041000 is 28.378 tCO₂e per tonne.

  • SO WHAT: That is an illustrative charge of about £262.21 per tonne, the highest intensity among the defaults read, so a small tonnage carries a large emissions quantity.

  • NOW WHAT: Model hydrogen in tCO₂e, not tonnes, by 31 December 2026.


6.6 Electricity and indirect emissions

  • FINDING: As at October 2026, UK CBAM prices direct emissions only from 1 January 2027, and HMRC's technical guidance (C3.5) states CBAM does not include indirect emissions associated with the use of electricity.

  • SO WHAT: Neither the electricity a manufacturer uses nor the electricity embedded in imported inputs generates a UK CBAM charge at launch.

  • NOW WHAT: Exclude electricity from the 2027 cost model by 31 December 2026.


Finance Act 2026 s.143(3) specifies five kinds of goods (aluminium, cement, fertilisers, hydrogen, and iron and steel), and electricity is not among them. According to Clifford Chance, indirect emissions may be considered from 2029 at the earliest.


6.7 India as a supplier country

  • FINDING: As at October 2026, over 620,000 tonnes of Indian steel went to the UK in 2025, according to GMK Center (16 July 2026).

  • SO WHAT: The UK importer, not the Indian supplier, is liable for UK CBAM under Finance Act 2026 s.146(1), so a UK buyer of Indian steel carries the charge on the emissions in the goods.

  • NOW WHAT: Open the emissions-evidence conversation with Indian suppliers by 31 December 2026.


India's Global Trade Research Initiative estimated, in 2025 reporting by PTI, that USD 775 million of Indian exports to the UK could be affected, at a rate of 14% to 24%. That estimate pre-dates the removal of ceramics and glass from scope. The India–UK trade agreement entered into force on 15 July 2026. According to ANI, Harjinder Kang, UK Trade Commissioner for South Asia, said CBAM was never part of the agreement, and Khaitan & Co states the agreement gives no exemption from UK CBAM. No source gives UK volumes for Indian aluminium, cement, fertilisers or hydrogen, or for a named Indian exporter.


7. Practical Action Framework


7.1 The SME CBAM exposure test

  • FINDING: As at October 2026, UK CBAM registration depends on the £50,000 customs-value threshold under HMRC's forward and backward tests, with customs value defined by SI 2026/802 reg 3(2).

  • SO WHAT: The five questions below tell the buyer whether UK CBAM action is needed now, and which of the five costs to model first.

  • NOW WHAT: Run the test on the last 12 months of purchases as a baseline by 31 December 2026.



7.2 The supplier emissions evidence playbook

  • FINDING: As at October 2026, SI 2026/995 reg 16(3) requires a UK CBAM verification report to be kept for six years, and HMRC's technical guidance states the producing installation must monitor emissions and arrange independent verification.

  • SO WHAT: The supplier must name the installation and hold verified calendar-year data, or the buyer pays on the default value.

  • NOW WHAT: Send the request pack to every in-scope supplier by 30 November 2026 (recommended internal deadline).


The producing installation monitors emissions over a calendar year (reg 9(1)), has them verified, and gives the importer a verification report. Without that, SI 2026/995 reg 4 applies the default value. The checklist below is proposed practice, not an HMRC template.


Table 14. Supplier request checklist (proposed practice), as at October 2026

Item to obtain

Why

Producing installation name and location

Evidence must match the goods purchased

8-digit commodity code

Links evidence to the import record

Calendar-year monitoring period

SI 2026/995 reg 9(1)

Direct emissions per tonne of product

Replaces the default value

Verifier name and accreditation

SI 2026/995 reg 12(1)

Verification report

Retained six years (reg 16(3))

Carbon price paid, per tonne

Evidence for relief (SI 2026/809 reg 9(1))

Response date and escalation contact

Decides when the supplier moves to default values

7.3 Worked example: hot-rolled coil importer

  • FINDING: As at October 2026, UK CBAM liability equals embodied emissions multiplied by the CBAM rate, less relief, and the illustrative steel rate is £9.69 per tCO₂e against a draft default of 3.468 tCO₂e per tonne.

  • SO WHAT: On the same Illustrative 450 tonnes, the default route costs £15,122.21 and a verified route at an Illustrative 2.6 tCO₂e per tonne costs £11,337.30, a difference of £3,784.91 that depends entirely on supplier evidence.

  • NOW WHAT: Replace the Illustrative inputs with your own tonnage, customs value and supplier data by 31 December 2026.


Scenario (Illustrative): a UK SME fabricator is the importer of record and imports hot-rolled coil (CN 72083900) from a supplier outside the UK and the EU, in three shipments of 150 tonnes in Q1 2027.

Table 15a. Sourced inputs, as at October 2026

Input

Value

Source

Illustrative steel rate

£9.69 per tCO₂e

HMRC, 16 October 2026

Default value, CN 72083900

3.468 tCO₂e per tonne

Draft default values notice, 16 October 2026

Liability formula

Embodied emissions × rate − relief

HMRC policy summary

Threshold

£50,000, forward and backward tests

HMRC guidance

Customs value basis

Customs value

SI 2026/802 reg 3(2)

Registration and return dates

31 January 2028; 31 May 2028

HMRC policy summary

The draft notice states a 10% markup applies to all sectors except fertilisers. The example uses the listed default as published and does not add the markup again.


Table 15b. Illustrative assumptions

Assumption

Value

Quantity (Illustrative)

450 tonnes (3 × 150 tonnes)

Customs value (Illustrative)

£600 per tonne

Verified emissions intensity, Scenario B (Illustrative)

2.6 tCO₂e per tonne

Rate sensitivity (Illustrative)

−20% and +20%

Carbon price relief (Illustrative)

£0

  • (a) Threshold test. Each shipment has a customs value of 150 × £600 = £90,000 (Illustrative), above £50,000. Total customs value is 450 × £600 = £270,000. The importer reaches the threshold on the first shipment.

  • (b) Scenario A (default value). Embodied emissions = 450 tonnes × 3.468 tCO₂e per tonne = 1,560.6 tCO₂e. Charge = 1,560.6 × £9.69 = £15,122.21 (illustrative as at October 2026). Per tonne of product: £15,122.21 ÷ 450 = £33.60.

  • (c) Scenario B (verified, Illustrative). Embodied emissions = 450 × 2.6 = 1,170 tCO₂e. Charge = 1,170 × £9.69 = £11,337.30. Per tonne of product: £25.19.

  • (d) Sensitivity on the rate (Illustrative ±20%): the rate runs from £7.752 to £11.628 per tCO₂e.


Table 15c. Result, Illustrative, as at October 2026

Scenario

tCO₂e

Charge at £9.69

At −20%

At +20%

Per tonne of product

Share of customs value

A: default 3.468

1,560.6

£15,122.21

£12,097.77

£18,146.66

£33.60

5.60%

B: verified 2.6 (Illustrative)

1,170.0

£11,337.30

£9,069.84

£13,604.76

£25.19

4.20%

  • (e) Reading the result. These figures use the illustrative Q1 2027 rate and apply to Q1 imports only.


HMRC publishes a new rate for each quarter, so a full-year 2027 charge adds the other quarters at their own rates. The 2027 return and payment fall due on 31 May 2028, and the figures are replaced when official Q1 2027 rates are published. The example excludes carbon price relief. Tonnes of product and tCO₂e stay separate throughout: the rate applies only to tCO₂e.


7.4 The manufacturer's control framework

  • FINDING: As at October 2026, SI 2026/802, SI 2026/995 reg 16(3) and SI 2026/809 reg 15 each require UK CBAM records for six years, and HMRC guidance states a fixed penalty of £500 applies to not keeping records.

  • SO WHAT: One missing record category creates both a penalty risk and a return that cannot be supported.

  • NOW WHAT: Assign an owner to each record category in Table 17 by 1 January 2027.


Table 16. Proposed responsibility matrix (R = responsible, A = accountable, C = consulted, I = informed), as at October 2026

Task

Procurement

Finance

Customs and logistics

Operations

External adviser

Scope screening

C

I

R

C

C

Importer check

I

C

R

I

A

Monthly threshold test

I

A

R

I

C

Supplier evidence

R

I

C

C

C

Record keeping

I

C

R

I

I

Return and payment

I

A

C

I

R

Quarterly rate update

I

R

I

I

C


Table 17. Six-year record index, as at October 2026

Record

Source

Retention

Import records: commodity code, description, import date, value, weight

SI 2026/802 reg 5

Six years

Place-of-origin records

SI 2026/802 reg 11

Six years

Verification report

SI 2026/995 reg 16(3)

Six years

Relief records

SI 2026/809 reg 15

Six years from the day after the end of the accounting period

Exemption evidence

HMRC "Keeping records for CBAM"

Held with the import record

Supplier emissions data and correspondence

Proposed practice

Six years, aligned with the verification report


7.5 Pre-1 January 2027 checklist and 2027–28 calendar

  • FINDING: As at October 2026, UK CBAM commences on 1 January 2027 under Finance Act 2026 s.158(1), and the filing calendar runs to 31 May 2028.

  • SO WHAT: Most tasks are internal and can finish before official Q1 2027 rates arrive.

  • NOW WHAT: Complete every item in Table 18 by 31 December 2026.


Table 18. Pre-commencement checklist, as at October 2026

Task

Owner (proposed)

Date

Match every SKU to its 8-digit code

Customs and logistics

30 November 2026 (recommended internal deadline)

Confirm importer name and EORI on declarations

Customs and logistics

30 November 2026 (recommended internal deadline)

Send the supplier request pack

Procurement

30 November 2026 (recommended internal deadline)

Add CBAM fields to the import ledger

Customs and logistics

1 January 2027

Start the monthly threshold test

Finance

1 January 2027

Replace illustrative rates with official Q1 2027 rates

Finance

When HMRC publishes, before 31 December 2026

Start monthly accrual

Finance

1 January 2027

Diarise registration

Finance

31 January 2028

Diarise return and payment

Finance

31 May 2028


8. Strategic Outlook

8.1 What is already scheduled

  • FINDING: As at October 2026, UK CBAM draft default values run to 31 December 2028, and HMRC has committed to per-country default values from 2029 with a review of the markup.

  • SO WHAT: The cost basis of the default route changes in 2029, so a supplier without verified data in 2027 may face a different charge when country-specific values arrive.

  • NOW WHAT: Build verified supplier evidence during 2027 and complete it by 31 December 2027 (recommended internal deadline).

HMRC will also publish rates quarterly.


8.2 What is not yet decided

  • FINDING: As at October 2026, the UK–EU link and any mutual exemption remain under negotiation, with a summit reported for 20 November 2026 and no regulations under Finance Act 2026 s.156 reported as laid.

  • SO WHAT: Each open item can change cost or scope for a specific buyer, so a cost model built now carries a stated margin.

  • NOW WHAT: Check for the outcome of the 20 November 2026 summit by 20 November 2026 and update the model.


Other open items: the official Q1 2027 rates, penalty and interest rates, the official qualifying carbon pricing scheme list, and whether glass, ceramics and refined products are added after 2027, as Clifford Chance suggests. If regulations are made under s.156, the date they take effect would decide which 2027 imports they cover.


9. FAQ Section


Do I have to register for UK CBAM if I import steel to use in my own manufacturing?

Yes, if your imports of CBAM goods reach £50,000 under HMRC's forward or backward test, because the threshold depends on customs value and not on what you do with the goods. HMRC guidance as at October 2026 describes no separate rule for production inputs, and Finance Act 2026 s.146(1) makes the importer liable. A business liable during 2027 must register by 31 January 2028.


How does the £50,000 UK CBAM threshold work for a small manufacturer?

Two tests apply to customs value, which SI 2026/802 reg 3(2) sets as the value determined for customs purposes. Under HMRC guidance as at October 2026, the forward test applies when you expect £50,000 or more of CBAM goods within the next 30 days. The backward test, on the first day of each month, looks at the previous 12 months.


Does using a freight forwarder or customs broker change who is liable for UK CBAM?

No: HMRC guidance updated on 7 October 2026 states that if someone else completes the import declaration, you are still classed as the importer. Under Finance Act 2026 s.146(1) the importer is liable for UK CBAM. HMRC guidance does not address delivered-duty-paid purchases or a forwarder named as importer, so take legal advice on those terms.


What emissions evidence do I need from my overseas supplier for UK CBAM?

You need emissions monitored over a calendar year (reg 9(1)) and independently verified (reg 12(1)) under SI 2026/995, with a verification report that you keep for six years (reg 16(3)). Without that evidence, as at October 2026, reg 4 applies HMRC's default value, which for hot-rolled coil is 3.468 tCO₂e per tonne in the draft notice. The default values notice is a draft, and HMRC states the values will be updated as necessary.


How much will UK CBAM cost my business in 2027?

UK CBAM cost is weight multiplied by emissions per tonne multiplied by the CBAM rate, less any relief (HMRC policy summary, as at October 2026). HMRC's illustrative Q1 2027 rates, from £1.45 to £9.79 per tCO₂e, create no liability and will be replaced by official rates. Section 7.3 shows the method on Illustrative inputs so you can substitute your own tonnage and supplier data.


When is my first UK CBAM return and payment due?

The first UK CBAM accounting period runs from 1 January 2027 to 31 December 2027, and the return and payment are due on 31 May 2028 (HMRC policy summary, as at October 2026). From 1 January 2028 accounting periods become quarterly, with deadlines on 31 July, 29 September and 30 November 2028 and 28 February 2029.


Conclusion

As at October 2026, UK CBAM gives a manufacturer one fixed date, 1 January 2027, and three open inputs: the official Q1 2027 rates, the final default values and the UK–EU position. The £50,000 threshold, the importer test and the supplier-evidence route are already set, and they decide whether the 31 May 2028 return carries a default-value charge or a verified one. Before 31 December 2026, match each purchased SKU to its 8-digit code, confirm that your business is the named importer, and send every in-scope supplier a request for calendar-year verified emissions data, so the monthly £50,000 test can start on 1 January 2027.


10. Research Limitations, Disclaimer and References

Research Limitations

This report reflects sources available as at 28 October 2026. Readers should apply these limits.

1. Wording and figures from legislation.gov.uk and GOV.UK pages were obtained through summarised extracts and should be checked against the live pages before reliance.

2. Finance Act 2026 ss.144–158 and Schedules 16 to 19 were not read in full. The report therefore does not reproduce the Schedule 16 commodity code list, the Schedule 17 registration provisions, the penalty and offence provisions or the text of the s.156 power on linked schemes. SI 2026/830 and SI 2026/994 are described from secondary sources only.

3. Parliamentary material was not read, including written statements HCWS245 and HCWS387, the committee record of 12 October and the Commons vote reported for 14 October on SI 2026/809. The report does not state what HCWS387 says. SI 2026/809 states it was laid for approval by resolution of the House of Commons within twenty-eight days, and the Commons vote reported for 14 October rests on a secondary source.

4. HMRC pages use different wording on registration timing. This report follows the policy summary, which states registration opens on 1 January 2028.

5. No agreement text, effective date or Treasury regulations on UK–EU linkage were found. The EU-side steps come from one secondary source.

6. Rates and defaults are provisional. Baseline free allocation was found for cement only, default value tables for aluminium and fertilisers are partial, and the notice states that a 10% markup has been applied in all sectors except fertiliser.

7. HMRC's Tax Information and Impact Note could not be verified and its figures are not used. No official per-business, SME or sector cost estimate was obtained, and no company has disclosed an actual UK CBAM cost.

8. HMRC has not published penalty percentages or CBAM interest rates beyond the £500 record-keeping penalty.

9. The 13 November 2026 feedback deadline is stated on the first page of HMRC's technical guidance, which carries no publication date.

10. HMRC’s published guidance does not settle whether downstream goods are in scope for 2027, or how liability works for forwarders named as importer or delivered-duty-paid shipments.

11. No quotation from a UK minister or named HMRC, HM Treasury or DESNZ official was taken from a primary page. Trade body statements are republished releases.

12. India data are secondary. No source gives UK volumes for Indian aluminium, cement, fertilisers or hydrogen, or for a named Indian exporter.

13. The qualifying carbon pricing scheme list and UKAS verifier capacity are reported from secondary summaries.


Sources Used in This Report


© 2026 Sekason Research Limited (CBAM Journal). All rights reserved.

No part of this report may be copied, redistributed or resold without prior written permission.




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