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UK CBAM Commodity Codes 2027: A Compliance Manager’s Guide to Scope, Exceptions and Classification Risk

Writer: CBAM Research Team
CBAM Research Team
2 days ago
21 min read

CBAM Journal Research & Intelligence Team, Sekason Research Limited. Published October 2026. 

Data verified: 7 October 2026 · Next review trigger: Illustrative CBAM rate, due “Autumn 2026” — not yet published


Disclaimer

This report is for information purposes only. It is not legal, tax, financial or regulatory advice, and it should not be relied on as a substitute for advice from a qualified professional adviser. Readers should consult a qualified customs, tax or legal adviser before making compliance, registration or classification decisions based on this report.


CBAM Journal cover for UK CBAM Commodity Codes 2027, with 41 codes in scope and subtitle on scope, exceptions, classification risk.

1. Executive Summary

UK CBAM scope is fixed in statute: Finance Act 2026, Schedule 16 lists 41 commodity-code entries across five sectors — aluminium, cement, fertilisers, hydrogen and iron and steel — less 13 “Except” exclusions. The charge starts on 1 January 2027, and from that date importers must record and report every CBAM-relevant good by its 8-digit commodity code under SI 2026/802. Two pricing inputs needed to calculate an actual liability — the UK default emissions values and the illustrative CBAM rate promised for “Autumn 2026” — remained unpublished as at 7 October 2026.


HMRC’s own sector guidance, published 16 July 2026, operationalises Schedule 16 rather than restating it, and at several points the two documents diverge: HMRC’s fertiliser guidance cites a code outside the statutory list; HMRC’s policy summary excludes a wider band of ferro-silicon codes than Schedule 16 actually excepts; and the fertiliser liability unit is stated inconsistently across HMRC’s own documents. A compliance team that reads guidance instead of the statute can misclassify goods in both directions — including goods, or excluding them, that Schedule 16 does not support.


This report gives UK importers of aluminium, cement, fertiliser, hydrogen, iron and steel goods a single verified matrix of every Schedule 16 code and its exceptions, names each statute-guidance conflict found in the published record, and sets out the classification control process a Compliance Manager needs before the first chargeable import on 1 January 2027.


2. Regulatory Context

UK CBAM scope sits in three layers: the Finance Act 2026 provisions that create the charge, the Schedule 16 Table that lists the chargeable commodity codes, and the secondary legislation and HMRC guidance that operationalise collection. Each layer carries a different legal weight, and a Compliance Manager needs to know which layer to trust when they conflict.


The Statutory Basis — Finance Act 2026, Schedule 16

  • FINDING: Finance Act 2026, Schedule 16 paragraph 1 specifies that “the goods specified by this Schedule are goods within a commodity code set out in the following Table, other than those within a commodity code that the Table indicates are excepted,” and the Table runs to 41 commodity-code entries across five sectors, less 13 “Except” exclusions.

  • SO WHAT: Scope is a statutory list, not a description — any HMRC guidance page, consultancy briefing or trade-press summary that states scope more broadly or more narrowly than the Table has no legal force, and a classification built on that wording is not defensible.

  • NOW WHAT: Classify every CBAM-relevant product against the Schedule 16 Table text itself, not against a summary of it, by 1 January 2027.


Section 143(1) of the Finance Act 2026 states: “CBAM is charged on the emissions embodied in a CBAM good when the good is imported into the United Kingdom.” Section 143(2) defines a CBAM good as “a good specified by Schedule 16.” Section 143(3) names the five sectors: aluminium goods, cement, fertilisers, hydrogen, and iron and steel goods. Schedule 16 paragraph 2(1) defines “commodity code” as “a code assigned to a classification of goods by the Goods Classification Table,” and paragraph 2(2) applies the existing customs classification rules made under section 8 of the Taxation (Cross-border Trade) Act 2018 to CBAM — meaning a correct customs classification is also the correct CBAM classification; there is no separate CBAM classification regime to learn.


How HMRC’s July 2026 Guidance Operationalises the Schedule

  • FINDING: HMRC’s scope guidance, published across five sector pages on 16 July 2026, states the operating rule as: goods in scope include “the heading” and “sub-headings that are under the heading,” and goods out of scope are “listed starting with the word ‘Except.’”

  • SO WHAT: A product that sits under an in-scope heading is chargeable by default — a Compliance Manager cannot assume a sub-heading is excluded unless it is specifically named as an exception.

  • NOW WHAT: Test every candidate product against the specific heading and exception wording on HMRC’s sector page and the Schedule 16 Table text, resolving any difference in the statute’s favour, before the compliance system goes live on 1 January 2027.


HMRC’s own guidance does not always match the wording of the rule it states. The fertiliser sector page gives a worked example that places commodity code 3101 in scope “as it falls under 3102” — but heading 3101 does not appear in Schedule 16 at all. Treating 3101 as in scope on the strength of that example has no statutory basis.


Secondary Legislation and the System Boundaries Document

  • FINDING: Four statutory instruments operationalise CBAM collection: SI 2026/802 (Administrative Provisions, made 13 July 2026), SI 2026/809 (Calculation of CBAM Rate and Carbon Price Relief, made 13 July 2026), SI 2026/830 (Transitory Provision, made 14 July 2026) and SI 2026/995 (Emissions and Verification, made 8 September 2026), alongside the System Boundaries Document version 1.00, dated 10 July 2026.

  • SO WHAT: The classification architecture around Schedule 16 is now operative law, not draft policy — a compliance system built against a February 2026 policy summary alone is working from a superseded picture of the rules.

  • NOW WHAT: Rebuild any classification or record-keeping design against the four made statutory instruments and the System Boundaries Document directly, before 1 January 2027.


The System Boundaries Document carries its own inconsistency with the policy summary: it states the fertiliser liability unit as “kilograms of nitrogen contained in the goods produced,” while the policy summary states “tonnes of nitrogen.” Neither document had been corrected as at 7 October 2026.


3. Compliance Obligations

Classification is not the end point — it is the input to three separate duties: recording, returning, and keeping the record consistent with ordinary customs classification practice. Each duty carries its own named instrument and its own penalty for failure.


Recording and Reporting by 8-Digit Commodity Code

  • FINDING: SI 2026/802, regulation 5 requires an importer to “keep a record evidencing… the 8 digit commodity code and description for the good” for every CBAM good, and regulation 10(1) requires the same 8-digit code on every return.

  • SO WHAT: An importer who records only a 6-digit or 4-digit heading — common in some customs systems — fails both the record-keeping duty and the return duty on the same transaction, doubling the penalty exposure from a single data gap.

  • NOW WHAT: Confirm the 8-digit field is captured and retained in the customs data pipeline for every CBAM-sector import, by 1 January 2027.


Regulation 4 of SI 2026/802 sets the weight basis for that record: weight is measured without packing materials, at the time of import, expressed in kilogrammes.


Classification Rules That Apply for CBAM

  • FINDING: Schedule 16, paragraph 2(2) states that “regulations under section 8 of TCTA 2018 about determining within which commodity code a good falls apply for the purposes of CBAM” — the same classification rules UK importers already apply for ordinary customs duty.

  • SO WHAT: An importer does not need a bespoke CBAM classification methodology — an existing, defensible customs classification for a product is the same classification CBAM relies on, which means existing tariff rulings and classification evidence are directly reusable.

  • NOW WHAT: Cross-check existing customs classifications for every product in the five CBAM sectors against the Schedule 16 Table, rather than re-deriving classification from scratch, by 1 January 2027.


HMRC’s importer and record-keeping guidance pages do not mention Advance Tariff Rulings or any CBAM-specific classification procedure, so the general TCTA 2018 classification framework is the only route available.


Classification Change Governance

  • FINDING: Schedule 16, paragraph 2(3) allows “the Commissioners” to “make such amendments to the Table… as they consider appropriate in consequence of the Goods Classification Table… being amended or replaced,” and no such amending regulations had been made or announced as at 7 October 2026.

  • SO WHAT: A product correctly classified as out of scope today could become in scope — or vice versa — without any separate consultation, purely as a consequence of a future UK Tariff change.

  • NOW WHAT: Set up a recurring check of UK Trade Tariff stop-press notices affecting Chapters 25, 28, 31, 72, 73 and 76, with the first scheduled review tied to the HS 2028 nomenclature, in force 1 January 2028.


UK Trade Tariff stop-press notices on 5 January 2026 and 15 June 2026 already created new 10-digit codes within Chapter 72 (7226200090, 7225401590, 7212506190, 7212506990) to maintain alignment with the EU tariff — evidence that code-level change inside the CBAM-relevant chapters happens routinely, independent of any CBAM-specific trigger.


4. Key Dates and Deadlines

The statutory timeline separates two things a Compliance Manager must not conflate: when the obligation to classify and record begins, and when the first return and payment is due.


Date

Event

Source

16 July 2026

HMRC publishes five sector scope pages, importer, records and registration guidance

HMRC registration collection

8–9 September 2026

SI 2026/995 (Emissions and Verification) made and laid

UK Parliament procedure

“Autumn 2026”

Illustrative CBAM rate due — not published as at 7 October 2026

Policy summary

1 January 2027

UK CBAM in force. Scrap out of scope. 8-digit record-keeping begins. First quarterly CBAM rate published

SI 2026/802, 809, 830, 995

31 December 2027

First (annual) accounting period ends

SI 2026/830

By 1 January 2028

CBAM registration service opens

HMRC registration collection

1 January 2028

HS 2028 nomenclature in force — first predictable trigger for a Schedule 16 Table amendment

WCO

31 January 2028

Registration deadline for importers who trigger registration in 2027

SI 2026/830, reg 2(2)

31 May 2028

First return and payment, covering calendar year 2027

SI 2026/830, reg 2(3)

31 July / 29 September / 30 November 2028, 28 February 2029

Quarterly returns for Q1–Q4 2028

SI 2026/830; policy summary

The First Reporting Deadline Is Not the First Obligation

  • FINDING: UK CBAM takes effect on 1 January 2027, but the first return and payment — covering the whole of calendar year 2027 — is not due until 31 May 2028 (SI 2026/830, regulation 2(3)).

  • SO WHAT: An 18-month gap between go-live and the first filing creates a false sense of runway: record-keeping, 8-digit classification and registration monitoring are live duties from day one, independently of when the first payment is calculated.

  • NOW WHAT: Build classification and record-keeping systems to be operational by 1 January 2027, treating the 31 May 2028 filing date as a downstream deadline, not the design deadline.


5. Financial Exposure and Risk

No official UK source breaks CBAM financial exposure down by sector or by commodity code. What is published is a set of aggregate figures and a fixed schedule of process penalties — both usable now — alongside two pricing inputs that are not usable yet.

Metric

Figure

Status

OBR-certified Exchequer yield

+£30m (2026-27); +£140m (2027-28); +£180m (2028-29); +£175m (2029-30); +£155m (2030-31)

Official, all sectors combined

Businesses importing CBAM goods

About 10,000; over 80% removed by the £50,000 threshold

Official estimate

Business administrative cost

£9m one-off; £16m a year ongoing

Official estimate

HMRC delivery cost

About £24m one-off IT; £31m ongoing, 2023–2031

Official estimate


The £50,000 Threshold Is a Classification Output, Not a Separate Test

  • FINDING: The UK CBAM registration threshold is £50,000, tested on a rolling basis — a forward-looking 30-day test (CBAM policy summary) and a backward-looking 12-month test, both set out in Finance Act 2026, Schedule 17, paragraph 2, with the £50,000 figure itself also confirmed in a Treasury written answer (PQ 415, 22 May 2026) — and it applies to the value of goods that are correctly classified as CBAM goods under Schedule 16.

  • SO WHAT: Misclassifying a single borderline line — for example, treating excepted 7204 scrap as chargeable, or omitting an in-scope ferro-alloy sub-heading — directly changes whether and when the £50,000 threshold is crossed, which changes whether registration is required at all.

  • NOW WHAT: Re-run the threshold calculation using only correctly classified Schedule 16 values for every importer with CBAM-sector trade, before the first 12-month test window closes after 1 January 2027.


Penalty Exposure for Classification and Record Failures

  • FINDING: Finance Act 2026, Schedule 17, paragraph 38 sets a £500 fixed penalty plus £40 a day for notification failures; paragraph 39 sets a £500 penalty for record-keeping failures; and a £200 late-return penalty applies via Finance Act 2021, Schedule 24, paragraph 15(4).

  • SO WHAT: These penalties attach to process failure — a missing 8-digit code or a late return — regardless of whether any CBAM charge amount can yet be calculated.

  • NOW WHAT: Prioritise notification, record-keeping and return-timing controls as immediately enforceable risks, with systems operational by 1 January 2027, ahead of any liability-modelling work.


What Remains Genuinely Unpriced

  • FINDING: As at 7 October 2026, HM Treasury and HMRC had not published the UK default emissions values for any CBAM good, nor the illustrative CBAM rate promised for “Autumn 2026”; the only verified comparator carbon-price points are the UK ETS auction clearing price of £67.55/tCO2e (14 January 2026), the UKA secondary-market price of £62/tCO2e (29 September 2026, S&P Global’s own price assessment), and the UK ETS civil-penalty price of £49.41, set 28 November 2025 — none of which is the CBAM rate itself.

  • SO WHAT: No per-code or per-tonne CBAM cost can be estimated from official UK sources yet; any model that states a UK CBAM £/tonne figure today is extrapolating beyond the published record.

  • NOW WHAT: Complete code-level classification and threshold-testing work now, and revisit cost modelling only once HMRC publishes the default emissions values and illustrative rate — tracked as the most time-sensitive item in Section 8.


For contrast only — this is EU CBAM, not UK CBAM — the EU’s equivalent allowance price (EUA) stood at €84.73/tonne on 6 October 2026 (single market-tracker source).


Separately, an industry figure from the Mineral Products Association, carried only through S&P Global’s reporting, puts UK cement-sector carbon policy costs (a broader figure than CBAM alone) at £82m in 2026, up from £45m in 2015 — context for the sector’s cost trajectory, not a CBAM liability figure. On the exporting side, S&P Global reported — citing unnamed government estimates — that UK exports facing EU CBAM are valued at roughly £7bn, and the UK Trade and Business Commission, an advocacy body, has put EU CBAM charges on UK exports at up to £800m by 2030 without a UK–EU linking exemption. Both of the last two figures are EU CBAM exposures, single-sourced, included here for contrast only.


READ: UK CBAM Registration and Liability Thresholds: A Compliance Manager's Guide


6. Sector-Specific Impact Analysis

Verified Schedule 16 Master Matrix

Sector

Codes in scope

Exceptions

GHGs

Legal basis

Aluminium (14 entries)

7601; 7603; 7604; 7605; 7606 (>0.2mm); 7607 (≤0.2mm); 7608; 7609; 7610 (excl. prefab buildings of 9406); 7611 (>300l); 7612 (≤300l); 7613; 7614; 7616

None listed — 7602 (scrap) and 7615 (household articles) are absent from the Table, not excepted from it

CO2, perfluorocarbons

Sch 16

Cement (6 entries)

2507 00 80 (kaolinic clay); 2523 10; 2523 21; 2523 29; 2523 30; 2523 90

None

CO2

Sch 16

Fertilisers (5 entries)

2808 00; 2814; 2834 21; 3102; 3105

3105 60

CO2 and N2O (2808 00, 2834 21, 3102, 3105); CO2 only (2814)

Sch 16

Hydrogen (1 entry)

2804 10

None

CO2

Sch 16

Iron & steel (15 entries)

2601 12; Chapter 72; 7301–7311; 7318; 7326

7202 21, 30, 50, 70, 80, 91, 92, 93, 99 10, 99 30, 99 80 (ferro-alloys); 7204 (scrap)

CO2

Sch 16


Iron and Steel — The Widest and Riskiest Entry

  • FINDING: The iron and steel entry covers all of Chapter 72, plus 2601 12 (agglomerated iron ore) and 13 named Chapter 73 headings (7301–7311, 7318, 7326), but excepts only 7204 scrap and eleven specifically named 7202 ferro-alloy sub-headings.

  • SO WHAT: Ferro-manganese (7202 11, 7202 19), other ferro-silicon (7202 29), ferro-chromium (7202 41, 7202 49) and ferro-nickel (7202 60) are not on the exception list and remain chargeable — a classification team that assumes “ferro-alloys are excluded” as a category will under-declare scope.

  • NOW WHAT: Test each 7202 sub-heading individually against the eleven-item exception list, not against the general description “ferro-alloy,” for every import from 1 January 2027.


UK Steel’s assessment, reported by the Climate Leadership Council on 11 May 2026, is that global default values could give the highest-emission steel imports an “effective 86% discount” against the CBAM price once default values are published.


READ: UK CBAM Steel Importer Intelligence Report 2026–2027


Aluminium — Scope by Inclusion, Not by Chapter

  • FINDING: The aluminium entry lists 14 specific headings within Chapter 76; 7602 (waste and scrap) and 7615 (table, kitchen and household articles) do not appear in the Schedule 16 Table at all.

  • SO WHAT: Treating “Chapter 76” as a safe proxy for scope will incorrectly sweep in two headings — scrap and household articles — that carry no UK CBAM liability.

  • NOW WHAT: Screen aluminium imports against the specific 14-heading list, explicitly excluding any 7602 or 7615 line from the CBAM-goods value, before the first threshold test after 1 January 2027.


The UK Aluminium Federation, in a release dated 27 August 2026, called for urgent pre-2027 clarity on five points — default emissions values, verification and accreditation, recognition of overseas-paid carbon costs, sector-specific technical guidance, and UK–EU ETS linking — but did not address the 7602/7615 scope question directly.


Cement — Scope Reaches Outside Its Obvious Chapter

  • FINDING: The cement entry includes 2507 00 80 (other kaolinic clays), a Chapter 25 code, alongside the five Chapter 2523 headings that cover clinker and finished cement.

  • SO WHAT: A classification screen limited to heading 2523 will miss a genuine in-scope precursor code sitting in a different chapter entirely.

  • NOW WHAT: Include 2507 00 80 explicitly in the cement-sector classification screen, alongside the 2523 headings, by 1 January 2027.


Breedon Group plc, in an RNS titled “Backing British Cement” dated 7 April 2026, called on government to “strengthen product classification and enforcement to stop mislabelling and under-reporting of imported cement.” Separately, the industry figure from the Mineral Products Association, reported by S&P Global around 2–3 July 2026, recorded UK cement-sector carbon policy costs at £82m in 2026, up from £45m in 2015, and noted non-EU cement imports reaching a 10-year high in March 2026.


Fertilisers — The Statute-Guidance Gap Risk

  • FINDING: Schedule 16 excepts only 3105 60 (fertilisers containing phosphorus and potassium) from the fertiliser sector’s five entries (2808 00, 2814, 2834 21, 3102, 3105); HMRC’s own 16 July 2026 fertiliser guidance gives a worked example that places 3101 — a heading absent from Schedule 16 — in scope “as it falls under 3102.”

  • SO WHAT: Following HMRC’s published example literally risks including a code the statute does not support.

  • NOW WHAT: Classify fertiliser imports against the five statutory codes (2808 00, 2814, 2834 21, 3102, 3105, less 3105 60) rather than HMRC’s example, by 1 January 2027.


The fertiliser sector carries a second unresolved inconsistency: the System Boundaries Document states the liability unit as “kilograms of nitrogen contained in the goods produced,” while the policy summary states “tonnes of nitrogen” — a tenfold-scale discrepancy that HMRC had not corrected as at 7 October 2026.


Hydrogen — Minimal Classification Risk

  • FINDING: The hydrogen sector contains a single Schedule 16 entry, 2804 10, covering hydrogen produced by steam reforming, partial oxidation and steam cracking, with CO2 as the only covered gas.

  • SO WHAT: This is the lowest classification-risk sector in the report — a single code with no exceptions leaves little room for a scope dispute.

  • NOW WHAT: Confirm the 2804 10 classification once against existing customs records and move compliance resource to the higher-risk sectors, by 1 January 2027.


Electricity — Confirmed Out of UK Scope

  • FINDING: Electricity is not in UK CBAM scope; the EU’s equivalent regime covers electricity under code 2716 00 00 (Regulation (EU) 2023/956, Annex I).

  • SO WHAT: A compliance team working from EU CBAM materials by default will incorrectly carry an electricity-import obligation into its UK programme.

  • NOW WHAT: Exclude electricity imports from the UK CBAM classification scope entirely — a permanent UK/EU regime difference, effective from 1 January 2027.


READ: UK CBAM vs EU CBAM: 15 Critical Differences Importers Must Understand Before 2027

7. Practical Action Framework

The Classification Control Process

  • FINDING: No systematic classification control process for UK CBAM is set out in HMRC guidance; the eight-stage process below is built directly from Schedule 16 and SI 2026/802’s record-keeping requirements.

  • SO WHAT: Without a defined, repeatable process, classification decisions are made ad hoc, and a decision cannot be reconstructed or defended if challenged after the fact.

  • NOW WHAT: Adopt and assign ownership for each of the eight stages below, with the process operational by 1 January 2027.

  1. Extract — pull the full customs declaration dataset for every import in the aluminium, cement, fertiliser, hydrogen and iron & steel chapters.

  2. Classify — confirm the correct commodity code for each line under the ordinary TCTA 2018 classification rules (Schedule 16, paragraph 2(2)).

  3. Map — match each classified code against the Schedule 16 Master Matrix (Section 6).

  4. Test exclusions — check each matched code against the 13-item exception list, including the ferro-alloy sub-headings and 3105 60.

  5. Verify — reconcile against existing customs rulings or classification evidence already held for the product.

  6. Document — record the classification decision, its statutory basis and date in an evidence file (below).

  7. Monitor — track UK Trade Tariff stop-press notices and any Schedule 16 paragraph 2(3) amendment.

  8. Escalate — refer unresolved classification questions to a customs classification specialist, then legal or tax advice, then an HMRC clarification request, in that order.


Worked Example — Threshold Test for a Steel Importer

  • FINDING: Schedule 16 lists Chapter 72 as in scope for iron and steel except 7204 (scrap) and eleven named ferro-alloy sub-headings; the registration threshold is £50,000, tested forward over 30 days and backward over 12 months (Finance Act 2026, Schedule 17, paragraph 2; the £50,000 figure also confirmed in Treasury written answer PQ 415, 22 May 2026); and SI 2026/802, regulation 7(1)(i) requires an estimate of CBAM-goods weight by sector at registration.

  • SO WHAT: Correctly excluding a scrap line from the CBAM-goods value, rather than including it in error, changes the cumulative value tested against the £50,000 threshold — and therefore changes whether, and when, registration is triggered.

  • NOW WHAT: Run this test against the importer’s own customs declaration data for the trailing 12 months, before the backward-looking test window first closes after 1 January 2027.


Worked example (illustrative scenario — a UK semi-finished steel importer):

A UK importer’s customs broker records four product lines over a 12-month period:

Line

Commodity code

Declared value

Classification outcome

1

7208 (hot-rolled flat steel)

£22,000 (Illustrative)

In scope — Chapter 72, no exception applies

2

7213 (bars and rods)

£14,000 (Illustrative)

In scope — Chapter 72, no exception applies

3

7204 (ferrous waste and scrap)

£19,000 (Illustrative)

Out of scope — Schedule 16 exception

4

7202 29 (other ferro-silicon)

£8,000 (Illustrative)

In scope — not on the eleven-item exception list (Schedule 16 excepts 7202 21, not 7202 29)

Scope rule applied (sourced): only lines matching Schedule 16’s Table, less its 13 named exceptions, count toward the £50,000 threshold (Finance Act 2026, Schedule 16; PQ 415, 22 May 2026).
Calculation if classified correctly: Lines 1, 2 and 4 count; Line 3 does not. £22,000 + £14,000 + £8,000 = £44,000 — below the £50,000 threshold; registration is not yet triggered on this 12-month window.
Calculation if Line 3 is wrongly included (treating scrap as in scope): £22,000 + £14,000 + £19,000 + £8,000 = £63,000 — above the £50,000 threshold, triggering a registration obligation that does not in fact exist under Schedule 16.

All product lines, values and the date window in this example are Illustrative; the scope rule, the exception list and the £50,000 threshold are sourced to Schedule 16 and PQ 415. No CBAM charge amount is calculated here, because the default emissions values and illustrative rate needed to do so were unpublished as at 7 October 2026 (Section 5).


Evidence File Standard for Each Classification Decision

  • FINDING: Schedule 16, paragraph 2(2) ties CBAM classification to ordinary customs classification rules, and SI 2026/802, regulation 6 sets a record-retention period.

  • SO WHAT: A classification decision must be defensible years after it was made, not just at first filing — an incomplete evidence trail becomes a liability the moment a classification is challenged.

  • NOW WHAT: Hold, for every classified code: the product description, the classification reasoning, any existing customs ruling relied on, the decision date and the sign-off name — retained for the full statutory record-retention period from 1 January 2027.


READ: UK CBAM Registration and Liability Thresholds: A Compliance Manager's Guide

8. Strategic Outlook

The 2027 Code-Change Watchlist

  • FINDING: No regulations amending the Schedule 16 Table under paragraph 2(3) have been made or announced as at 7 October 2026; the next predictable trigger for such a change is the HS 2028 nomenclature, in force 1 January 2028 — not “HS 2027,” an edition that does not exist.

  • SO WHAT: Scope is stable on current published evidence through the end of 2027, but search terms and commentary referencing “HS 2027” circulate in the market and can lead a compliance team to the wrong reference document.

  • NOW WHAT: Treat HS 2028 (1 January 2028) as the next scheduled scope-review point, and monitor UK Trade Tariff stop-press notices continuously in the interim.


Separate from the code list itself, the phase-out of free allocation to the CBAM sectors is reported — by

Paul Hastings and Clifford Chance — to begin alongside UK CBAM’s 1 January 2027 start, on an indicative nine-year schedule; and UK–EU ETS linking, which could affect which consignments pay rather than which codes are listed, remained under negotiation and not legally binding as at 7 October 2026.


For the Compliance Manager, three actions carry a fixed date. Confirm the 8-digit classification system and the eight-stage control process (Section 7) are operational by 1 January 2027. Re-run the £50,000 threshold test on correctly classified Schedule 16 values at the first 12-month window after that date. Set a standing review for 1 January 2028, when HS 2028 becomes the first scheduled point at which the Schedule 16 code list could change.


9. FAQ Section


Which commodity codes are in scope of UK CBAM from 1 January 2027? 

The codes listed in Finance Act 2026, Schedule 16: 41 entries across aluminium, cement, fertilisers, hydrogen and iron and steel, less 13 named exceptions. The full matrix is in Section 6 of this report.


Which UK CBAM commodity codes are excluded from the CBAM tax? 

Thirteen exclusions apply: eleven named 7202 ferro-alloy sub-headings, 7204 ferrous scrap, and 3105 60 fertilisers containing phosphorus and potassium. Aluminium codes 7602 and 7615 are not excluded — they are simply absent from the Schedule 16 list.


Are iron and steel scrap and ferro-alloys covered by UK CBAM? 

Scrap (7204) is excepted. Ferro-alloys are only partly excepted: eleven specific sub-headings are excepted, but ferro-manganese, ferro-chromium and ferro-nickel are not on that list and remain chargeable.


Is aluminium scrap or aluminium householdware covered by UK CBAM? 

No. Aluminium scrap (7602) and household articles (7615) do not appear anywhere in the Schedule 16 Table, so they carry no UK CBAM liability.


If our product description differs from HMRC’s wording, how do we know whether the code still applies? 

Classify against the Schedule 16 Table text and the ordinary customs classification rules under section 8 of the Taxation (Cross-border Trade) Act 2018, which Schedule 16 applies to CBAM directly. HMRC’s sector-page wording is guidance, not the statute, and should be checked against the Table where it differs.


Does having a CBAM-liable commodity code automatically mean we have to register? 

No. Registration depends on the £50,000 threshold, tested forward over 30 days and backward over 12 months, applied only to the value of correctly classified CBAM-goods codes. A liable code contributes to that test; it does not by itself trigger registration.


10. References and Sources

Research Limitations

This report draws on Finance Act 2026, four 2026 statutory instruments, the System Boundaries Document and HMRC’s published guidance, all current as at 7 October 2026. Several limitations apply. No UK default emissions values or illustrative CBAM rate had been published at that date, so no per-code or per-tonne CBAM cost figure can be given — none appears in this report. No official UK source breaks CBAM financial exposure down by sector or by commodity code; the figures given are aggregates, and several — the cement carbon-cost figure, both India export figures, the EU-exposure figures and the EU allowance price — rest on a single industry, think-tank, advocacy or market-tracker source rather than an official determination. No regulations amending the Schedule 16 commodity-code list have been made or announced, and this report assumes the list as enacted remains in force through 2027. HMRC’s guidance contains two unresolved inconsistencies with the statute — on the fertiliser worked example and on the scope of the ferro-silicon exception — which this report has resolved in the statute’s favour, not HMRC’s. Trade and export-exposure figures for India are available only for iron, steel and aluminium; no equivalent figures exist for cement, fertilisers or hydrogen, and no company-level export data was available for any named producer. The status of UK–EU ETS linking is known only from secondary reporting.


Sources Used in This Report



This report is published by CBAM Journal, a research intelligence service of Sekason Research Limited, London. It is for information purposes only and does not constitute legal, tax, financial or regulatory advice. Figures and regulatory positions are current as at 7 October 2026 and may change — see Section 8 for the next scheduled review trigger.


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