Open consultation

Carbon border adjustment mechanism (CBAM): Policy update

Published 24 April 2025

1. Introduction

On 24 April 2025, the government published the draft primary legislation for the carbon border adjustment mechanism (CBAM) for technical consultation.

The technical consultation seeks to ensure that the primary legislation meets the policy intent. It is not a further consultation on the policy design. Any feedback on the legislation should be sent by email by 11:59pm on 3 July 2025.

This policy update is being published to support businesses, international partners and other interested parties in engaging with the technical consultation and to provide an update on decisions taken by ministers following the October 2024 government response to the previous policy consultation on ‘the introduction of a UK carbon border adjustment mechanism’. You can read the previous consultation and government response) on GOV.UK. Further detailed guidance will be provided in advance of the commencement of CBAM ^{[footnote 1]} on 1 January 2027.

Who should read this document

The following stakeholders should read this document:

• UK importers of goods from the aluminium, cement, fertilisers, hydrogen, and iron and steel sectors and downstream producers that use these goods in their supply chains
• respondents to the previous consultation
• international partners with an interest in CBAM policy

Further questions

A summary of the impacts of introducing CBAM is set out in the tax information and impact note published alongside the draft legislation and this policy update.

If you have any questions about CBAM or would like to be added to the CBAM mailing list, please email us.

2. Background

The UK government has committed to reaching net zero across the economy by 2050. Decarbonising UK industry is crucial to achieving this goal.

The UK’s primary carbon pricing mechanism is the UK Emissions Trading Scheme (ETS). The UK ETS works on a ‘cap and trade’ principle, where a cap is set by the UK ETS Authority on the total amount of certain greenhouse gas emissions that can be emitted by the sectors covered by the scheme. Within this cap, participants buy emission allowances at auction or on the secondary market which they can trade with other participants as needed.

Imported goods are not subject to the UK ETS, meaning that, where those goods have not been subject to a similar carbon price in the jurisdictions in which they are produced, there is disparate carbon pricing across goods available on the UK market. This may result in carbon leakage which could undermine the objective of decarbonisation and the reduction in global emissions. 

Carbon leakage is the movement of production and associated emissions from one country to another due to different levels of decarbonisation effort through carbon pricing and climate regulation. Carbon leakage can undermine efforts to reduce global emissions and curtail private investment in decarbonisation – compromising efforts to limit global warming to 1.5°C.

The UK’s current main measure to mitigate carbon leakage risk is the system of free allocation under the UK ETS which provides for the distribution of free allowances. Free allowances allow firms to still participate in the UK ETS whilst providing an incentive to reduce their emissions, they are shielded to various extents from paying the full UK carbon price. Reforms to the UK ETS, as set out by the UK ETS Authority in July 2023, will reduce the number of UK ETS allowances available for purchase from the government by 45% between 2023 and 2027, from approximately 79 to 44 million, and the number of free allowances will also decrease.

As the UK continues to decarbonise, the pace of the UK’s ambition creates additional risk of carbon leakage. To address this risk, the government is introducing a CBAM. This will ensure highly traded, carbon intensive goods imported to the UK from overseas face a carbon price which is comparable to the carbon price paid by domestic producers of such goods. This will prevent the displacement of emissions overseas to ensure that the UK’s decarbonisation efforts lead to a true reduction in global emissions.

3. Scope of CBAM

Geographic scope

CBAM will apply:

• to specified goods that are imported into the UK on or after 1 January 2027
• across the whole of the UK. Goods which enter the UK from the Crown Dependencies including the Isle of Man, Overseas Territories and UK Continental Shelf will be subject to CBAM
• only to goods which originate from outside of the UK according to the UK’s non-preferential rules of origin

Sectoral and product scope

CBAM will place a carbon price on the emissions embodied in imports of specified goods in the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors.

Within these sectors, CBAM will only apply to specific ‘CBAM goods’ that are imported into the UK. These goods are determined by the product level scope of CBAM and are identified by the commodity codes as listed in the Annex (correct as at the date of this publication).

The commodity codes also identify a small number of goods within these sectors that will be excluded from CBAM. For example, imported scrap products within the aluminium and iron and steel sectors, identified via their relevant commodity code will not be within the scope of CBAM from 1 January 2027.

In the event of changes to the UK Tariff affecting commodity codes in scope of CBAM, the codes will be updated to maintain the product scope of CBAM. These changes will take effect in line with changes to customs legislation to ensure that goods do not unintentionally fall in or out of scope of CBAM due to commodity code changes.

The sectoral and product scope of CBAM will be kept under review beyond 2027 to reflect the evolving carbon leakage risk and technological context, as well as changes to the feasibility of implementing a CBAM for further sectors or goods.

4. Calculating CBAM liability

The overall approach to determining CBAM liability is depicted in Figure 1.

Figure 1: Overview of CBAM liability calculation

This figure shows the calculation for the CBAM rate and liability. The calculation is comprised of 3 elements:

1. the UK CBAM rate which is calculated by multiplying the imported embodied emissions by the CBAM rate
2. the carbon price relief which is calculated by multiplying the relevant imported embodied emissions by the deductible carbon price
3. CBAM liability which is calculated by subtracting the carbon price relief from the UK CBAM rate

Emissions measurement 

The CBAM charge will be based on the emissions embodied within the imported CBAM goods. These emissions can be split into 2 types:

• direct emissions
• indirect emissions

Direct emissions are directly related to the production processes of CBAM goods – for example, emissions released when burning gas to heat up raw materials. This includes emissions from heating and cooling processes, whether those processes took place on or off site.

Indirect emissions are related to the generation of electricity, where that electricity is then consumed during the production of CBAM goods irrespective of whether the electricity was produced on or off site.

The CBAM charge will also apply to the emissions embodied in relevant precursor goods used in the production of complex CBAM goods. A relevant precursor good refers to an in-scope CBAM good which is used as an input into the production process of a complex good which is also within scope of CBAM. To measure the emissions of a complex CBAM good, it will be necessary to include the emissions embodied in relevant precursor goods.

This is necessary to ensure comparable CBAM coverage to the UK ETS. Further detail on emissions measurement, including the system boundaries of CBAM, confirmation of those CBAM goods deemed to be precursor goods and the mapping of relevant precursor goods to resulting complex CBAM goods will be set out in delegated legislation.

All embodied emissions will be measured and reported in tonnes of carbon dioxide equivalent (tCO2e).

When determining the embodied emissions subject to CBAM, the liable person has 2 options available to them:

1. using actual data about the emissions embodied within CBAM goods

2. using default emissions values as determined by the UK government

Actual emissions data

The liable person will need to obtain embodied emissions data for goods in tCO2e from their supply chains or use default emissions values provided to include on their CBAM return. Where actual embodied emissions data is provided, the liable person will be required to hold evidence that these emissions figures have been independently verified.

Verification of emissions data for CBAM will be required by a body accredited by an International Accreditation Forum member. Accreditation does not need to be from a body in the country where the emissions are produced, meaning emissions from countries without accreditation services can still be verified by any accredited body. 

Further detail on monitoring, reporting and verification of emissions will be set out in delegated legislation and guidance ahead of commencement of CBAM. 

Default emissions values

Whilst it will be preferable for the liable person to use independently verified actual emissions data, where this is not possible, the liable person can use default emissions values for CBAM goods.

From 1 January 2027, there will be one default emissions value set per CBAM good. After 2027, the government is considering the feasibility of moving to an alternative approach for default emissions values. Default emissions values will be published in delegated legislation in advance of CBAM coming into force. They may be set for a single year or multiple years. Where required they may be amended or updated by HM Treasury (HMT).

Weighing

To work out the embodied emissions contained within an imported CBAM good, the liable person will be required to know and hold records evidencing the net mass of CBAM goods they have imported. This information will also be required to complete the CBAM return.

The government will work with industry and stakeholders to explore the feasibility of setting out a range of weighing methods which can be used to determine the weight of CBAM goods. Further information will be published ahead of implementation.

CBAM rates

The CBAM rate is the tax rate that will apply to the emissions embodied in CBAM goods imported into the UK. There will be a single rate per sector in scope of CBAM.  

The CBAM rates will reflect the effective carbon price in the UK.  The rates will therefore be set by reference to the UK’s domestic carbon pricing mechanisms. These are the UK ETS, the UK’s primary carbon pricing mechanism, and the Carbon Price Support (CPS), which applies to fossil fuels used to generate electricity in Great Britain only. These prices are the same for all sectors. To arrive at a rate per sector, there will be an adjustment to account for the allocation of free allowances under the UK ETS.

Approach to the CBAM rate and free allocation adjustments

The previous consultation set out that there would be an adjustment to the UK ETS reference price to reflect the existence of free allowances available to the domestic industry within that sector over the previous year. This was referred to as the ‘free allocation adjustment’.

The majority of consultation respondents agreed with the proposed approach towards free allocation adjustments, with a minority concerned that it would not be an accurate reflection of how emissions are priced domestically. The government response confirmed further consideration would be given towards the approach to free allocation adjustments.

The government has decided to proceed with the approach proposed within the consultation, which will reduce the CBAM rate to reflect the existence of free allowances available to each domestic sector. This will produce a single CBAM rate per sector.

The government will continue to assess wider approaches to the free allocation adjustment post-2027

The CBAM rates will be calculated and published by the government at the beginning of each quarter from 1 January 2027.

The relevant CBAM rate for calculating a liable person’s CBAM liability will therefore be the rate for the relevant sector which applied when the CBAM good was imported.  

The following diagram sets out the calculation for the CBAM rates, and the subsequent text provides further detail on the different elements of the calculation:

Figure 2: Illustrative example of CBAM rate calculation

This figure provides an illustrative example of CBAM rate calculation. The calculation is comprised of 4 elements:

1. the indirect emissions price which is calculated by multiplying indirect emissions by the sum of the UK ETS reference price and the CPS rate
2. the direct emissions price which is calculated by multiplying the direct emissions by the UK ETS reference price, the sum of which is then multiplied by 1 minus any free allocation adjustments
3. the indirect emissions price and direct emissions price are added together and then divided by the third element, tonnes of emissions for the given sector, which is determined by the sum of indirect and direct emissions
4. the calculation is the final output of CBAM rate calculation, which is CBAM rate for the given sector

Definition of terms in Figure 2:

• indirect emissions price: as both the UK ETS and CPS (but not free allowances) apply to indirect emissions, the indirect emissions price will be calculated by taking into account both the UK ETS reference price and the CPS rate
• direct emissions price: as the UK ETS and free allowances (but not the CPS) apply to direct emissions, the direct emissions price will be calculated by taking into account the UK ETS reference price, adjusted to reflect any free allowances available within the sector over the most recent scheme year for which there is complete data (see below)
• UK ETS reference price: This will be calculated by taking the average auction price under the UK ETS from the previous quarter. This allows the CBAM rate to track the changes in the UK ETS price across the year, whilst giving the liable person certainty on the CBAM price they will pay for their consignments in each accounting period. In the event that there is no auction clearing price from the previous quarter, HMT will be able to set the ‘UK ETS reference price’ by discretion with reference to certain criteria
• Free Allocation Adjustment: this will be calculated based on the free allowances available to domestic industry under the UK ETS over the most recent scheme year for which there is complete data. There will be a free allocation adjustment per sector in scope of CBAM to produce a CBAM rate per sector. The adjustment will ensure that the CBAM rates reflect the effective price paid by domestic producers
• CPS rate: This will be determined by reference to the CPS rate for the current quarter’; however, the CPS rate will not change more frequently than once per year on 1 April

Carbon price relief

The liable person can claim carbon price relief which will reduce their CBAM liability if the embodied emissions in the CBAM goods they have imported have previously been subject to a deductible carbon price.

The government response to the previous consultation confirmed that only explicit carbon prices that place a price per tCO2e directly on greenhouse gas emissions produced during a given process, can be deducted from person’s CBAM liability. These prices usually take the form of either an emissions trading scheme with a market-based price, or a carbon tax with a fixed price.

The government can confirm it will also allow carbon pricing schemes which use standardised emissions factors to quantify the embodied emissions in the CBAM good to be deductible. This is to reflect how emissions are priced domestically, where the UK carbon price is paid on the emissions of production regardless of the wider regulatory or non-pricing carbon reduction measures.

The application of wider regulatory policies or non-pricing carbon reduction measures overseas, such as carbon regulations and fuel duties, will not be deductible as they do not place a price per tCO2e directly on emissions nor use standardised emissions factors to quantify embodied emissions.

As with the CBAM rate, the carbon price deduction will need to account for any adjustments which reduce the headline carbon price, such as free allowances and graduated carbon prices, to determine the effective deductible carbon price.

Where a CBAM good has been subject to multiple deductible carbon prices, the total carbon price can be offset from the CBAM liability. Further detail as to the characteristics of deductible carbon pricing schemes and the methodology of how to calculate the effective carbon price incurred will be set out in delegated legislation and guidance that will follow.

Evidence requirements for claiming carbon price relief

The liable person will be required to hold verified evidence of all carbon price deductions they claim on their return. Where the CBAM goods were produced by anyone other than the liable person, the liable person is responsible for obtaining verified evidence from their supply chain.

The liable person will not need to obtain evidence that the carbon price has already been paid to claim carbon price relief, but they will need to hold verified evidence that a liability has been incurred.

The government will provide further detail in delegated legislation about the verification of deductible carbon prices and provide comprehensive support and guidance in advance of the commencement of CBAM.

International agreements or arrangements

The government response announced that the government would consider the use of international agreements or arrangements to ease compliance with CBAM.

One of the areas the government is considering the use of international agreements or arrangements is in relation to claiming carbon price relief where goods have been subject to a deductible carbon price.

The draft primary legislation setting out the carbon price relief provisions provide flexibility that will allow the government to implement obligations ininternational agreements or arrangements in relation to carbon prices in other jurisdictions and to make reference to third party information including from international partners, in order to simplify the calculation and claim carbon price relief.

The provisions also give flexibility to specify different evidence requirements for the carbon price relief, so that these may be simplified where an international agreement or arrangement is in place.

Exemption for goods originating in a jurisdiction with a linked carbon pricing scheme

The overall objective of CBAM is to mitigate carbon leakage. The risk of carbon leakage is created due to differences in decarbonisation efforts between countries, including differences in carbon pricing. The carbon leakage risk to the UK would be minimal where goods originated from a jurisdiction with a linked ETS because our ETS prices would converge.

The government is therefore including powers to confer an exemption that will be available for goods originating in a jurisdiction that has entered arrangements to link their ETS with the UK ETS. Goods covered under the exemption would not need to be reported on a CBAM return or contribute to the minimum registration threshold when determining if a person is liable for CBAM.

5. Administration, payment and compliance

Registration  

A person must register with HM Revenue and Customs (HMRC) for CBAM if they meet or exceed the minimum registration threshold. The minimum registration threshold considers the total value of CBAM goods that are imported or are expected to be imported into the UK over a given period as set out in the 2 tests below. The value is set at £50,000.

To determine the liability start date, the following tests must be considered in relation to CBAM goods passing the tax point on or after 1 January 2027. Further detail on the tax point is set out below.

1. Forward looking test

On any given day, a person must consider whether they expect that the total value of their CBAM goods passing the tax point over the next 30 days will meet or exceed the £50,000 minimum registration threshold. Where the test is met, the person’s liability begins on the day the test was met.

2. Backward looking test

On the first day of the month, a person must look back over the preceding 12-month period to determine if the total value of their CBAM goods that have passed the tax point met or exceeded the £50,000 minimum registration threshold. In the first year of CBAM, a person need only look back to 1 January 2027. Where the test is met, the person’s liability begins on the day they applied the test.

If a person meets both tests, their liability starts from the earlier of the 2 dates.

Anyone who is liable for CBAM must register with HMRC, keep records of the goods they import, submit CBAM returns and pay any tax due to HMRC.

Anyone importing CBAM goods into the UK will be required to keep under review whether they need to register with HMRC and account for CBAM.

Ordinarily, the liable person will have 30 days to register with HMRC from the day they become liable. However, in the first year of CBAM, businesses will have longer to register.

Further detail on the information needed to register a person’s liability for CBAM with HMRC will be set out in delegated legislation and guidance.

Group treatment

To help reduce administrative burdens it may be possible for 2 or more liable people that are connected, to apply to be treated as part of a group. To be eligible for group treatment, the following criteria must be satisfied:

• each member must be a corporate body
• at least one member must have an established place of business in the UK
• all members must be under the same control

Each group will need to assign a group representative who will be responsible for submitting CBAM returns and paying the CBAM liability on behalf of the entire group. The group representative must be resident in the UK or have a permanent establishment in the UK. However, all members of the group will be jointly and severally liable for the tax due and any CBAM debts of the representative member.

Value of CBAM goods

To ensure that the value of goods is calculated consistently when determining if a person is liable for CBAM, the government will set out further information about the methods to be used in delegated legislation and guidance.

De-registration

The liable person can apply to HMRC and request to be de-registered. A person will only be de-registered where HMRC is satisfied that the person is not required to be registered and has not been liable in the previous 12 months.

HMRC may decline to de-register a person if:

• there are outstanding amounts of CBAM due from the person
• there are outstanding returns due from the person
• it is considered that the person will be registrable in the following 12 months

Tax point  

The CBAM tax point is the point at which the CBAM charge arises.

Generally, the tax point will arise when the CBAM good is imported into the UK and the good becomes subject to import duty. For goods not subject to import duty the tax point will arise when the goods enter the UK.

However, there are exceptions to this general rule which are covered below.

Goods processed under special customs procedures

Where a CBAM good is declared for a special customs procedure, it may undergo processing in the UK before the tax point arises. This can happen whilst the good is declared to:

• a storage procedure (free zones)
• an inward processing procedure
• an authorised use procedure (or Union end-use procedure).

Where a CBAM good is processed into a non-CBAM good in a special customs procedure, a CBAM charge will still arise when the non-CBAM good passes the tax point, however, the CBAM liability will be based on the original CBAM good declared to the procedure, before it was processed.

Where a CBAM good is processed into a good which is another CBAM good, the CBAM charge will continue to arise when the new processed CBAM good passes the tax point and the CBAM liability will be based on the CBAM good which passes the tax point.  

Where a CBAM good is processed into a good and is exported from the UK before the tax point arises, there will be no CBAM liability.

In all cases, the value of the CBAM good which the CBAM charge is based on, will count towards the £50,000 minimum registration threshold.

Goods processed outside of the UK

CBAM goods can be exported for processing outside of the UK. This can happen under the outward processing procedure, or when a good leaves Northern Ireland to be processed in the EU before returning to Northern Ireland.

If the good is processed and re-enters the UK as a CBAM good, when the good passes the tax point, the CBAM charge will arise. However, if the original good was a CBAM good that was subject to a carbon price in the UK, the carbon price previously incurred can be used to adjust the CBAM liability down. Only the difference in value between the original good and the processed CBAM good will count towards the £50,000 minimum registration threshold. Further detail will be set out in delegated legislation.

Where a CBAM good is exported for outward processing and is re-imported as a non-CBAM good, there will be no CBAM liability as the good is no longer chargeable.

Returned goods relief

Where a CBAM good is imported into the UK and returned goods relief is available in respect of the good, there will be no CBAM liability. There will also be no CBAM liability for Union goods exported from Northen Ireland into the EU and reimported into the UK providing the goods is:

• reimported within 3 years of export from Northern Ireland; and
• returned in the same state in which it was exported

Where all the conditions are met, the returning CBAM good will not need to be declared on a CBAM return or be factored into the calculation for the £50,000 minimum registration threshold when applying the CBAM liability tests.

For compliance purposes, the liable person will need to keep evidence to demonstrate the criteria have been met.

The person importing the CBAM good does not need to be the same person that exported the good to claim this relief for CBAM.

Liable person

The person liable for the CBAM good is the importer.

This will be the person in whose name the customs declaration is made. Where the customs declaration is made on behalf of another person, the importer is the person on whose behalf the declaration is made.

Where there is no requirement to make a customs declaration, the importer is the person on whose behalf the CBAM good is imported.

Only people importing CBAM goods in the course of a business that meet either of the CBAM liability tests will be liable for CBAM. This means private individuals importing CBAM goods for non-commercial purposes will not be liable for CBAM.

The liable person will be able to appoint a tax agent to act on their behalf and submit CBAM returns. The tax agent cannot register for CBAM on behalf of the liable person and no liability will be attached to the tax agent.

Accounting periods, returns, payments and repayments

The liable person will need to complete and submit an online tax return for CBAM following the end of each accounting period from the time they become registrable, until they satisfy the rules for de-registration. 

Where the liable person has a nil liability for an accounting period (for example, because they did not import any CBAM goods, or they did but their liability was reduced to zero because the goods they imported had already been subject to a higher deductible carbon price), they will still need to complete and submit a return for that accounting period.

Accounting periods

The first accounting period for CBAM will be 12 months, from 1 January 2027 to 31 December 2027.  Returns and payments will be due 5 months after the end of the first accounting period (31 May 2028). This is to provide businesses with sufficient time to obtain supporting information required to complete their first return, whilst also allowing HMRC time to develop and test necessary IT systems. These details will be set out in delegated legislation and guidance.

Subsequent accounting and payment periods from 1 January 2028

There was a range of feedback received on the consultation proposal to move to quarterly accounting periods from 2028 with a 1 month return and payment window. Whilst over half of respondents supported the proposals, concerns were raised around the impact on providing verified actual emissions data and verified information about the deductible carbon price that CBAM goods had been subject to.

The government has now decided that from 1 January 2028, accounting periods for CBAM will move to quarterly but with a 2 month return and payment window. HMRC may further extend the return and payment deadline for the first quarterly accounting periods to ensure deadlines do not overlap with that of the first accounting period, and to support businesses with the transition to quarterly accounting.

This will bring greater alignment between CBAM and other UK tax models whilst providing businesses with more time to gather the data required to submit their return. To further address concerns raised about data availability, subject to certain limits, the government will allow the use of the most recently verified emissions data, and the most recently verified information for elements required to determine the effective deductible carbon price (for example emissions and adjustments received). Further detail will be set out in delegated legislation and guidance ahead of commencement of CBAM. This will include further information on the frequency with which emissions data and effective deductible carbon prices will need to be verified.

Information on a return

At the end of each accounting period, the liable person or their tax agent will need to complete and submit a tax return to HMRC.

The following information will be required from the liable person on their CBAM returns:

• the CBAM goods imported during the relevant accounting period by reference to the commodity code in force when the good passed the tax point, including when a CBAM good is processed into a non-CBAM good in the UK while under a special customs procedure
• the weight of those CBAM goods
• the total emissions embodied in those CBAM goods (where not available, a default emissions value would need to be used)
• any effective deductible carbon price incurred on those CBAM goods
• for the first accounting period, the quarter in which each CBAM good passed the tax point

Further detail relating to the circumstances in which the liable person will be able to amend a return, or where a repayment of CBAM liabilities is allowed will be set out in delegated legislation, alongside the methods of payments that will be accepted by HMRC.

Record keeping

In line with other indirect taxes, the liable person will be required to keep records relating to CBAM.

Further details on the records that HMRC will require the liable person to keep and the duration for which these records must be preserved will be set out in delegated legislation.

Compliance and penalties

HMRC puts compliance and customer service at the heart of everything it does, striving to promote compliance by helping customers get it right first time and by designing out the opportunity for non-compliance. We aim to implement CBAM in a way that minimises the risk of avoidance or evasion and provides a level playing field for businesses.

HMRC applies penalties to encourage people to meet their tax obligations. Penalties act as a sanction to those who do not meet their obligations and reassure those that do that they are not going to be disadvantaged. HMRC does not use penalties as a method of raising revenue but as a deterrent to those who fail to pay the right amount of tax or fail to comply with legal requirements required for the administration of the tax.

HMRC will extend the use of existing powers and penalties to enforce compliance with CBAM. This means there will be penalties for the following offences:

• failure to notify HMRC of liability for CBAM
• failure to submit a CBAM return
• failure to pay an amount which is payable in respect of CBAM
• errors in documents which support the accounting of CBAM
• failure to disclose a tax avoidance scheme, and serial tax avoidance
• failure to comply with an information notice

In addition to the above, to ensure compliance HMRC is introducing a general regulatory penalty for failure to comply with specific rules and regulations related to CBAM. HMRC is also introducing legislation to prevent the artificial separation of business activities to prevent circumvention of the tax.

Whether a good is classified as a CBAM good is to be determined by reference to the commodity code, which adopts the format under the Combined Nomenclature (CN) system, applying to the good at the point the good passes the tax point. Where HMRC identifies misdescription of CBAM goods, sanctions and penalties will apply.

Criminal offences will also apply for fraudulent evasion of CBAM.

Assessments

Where the liable person fails to register for CBAM or fails to provide a complete or accurate return, HMRC will make a best judgement assessment of the amount of CBAM that is due. HMRC will notify the liable person of this assessment.

Compulsory registration

Where the liable person fails to register for CBAM, HMRC will be able to compulsorily register them and assess for the tax due.

6. Next steps

Earlier this year, HMRC launched a CBAM Joint Industry Working Group to engage with key stakeholders that represent the sectors and industries most affected by CBAM. In addition, the government has published Terms of Reference (ToR) for a CBAM International Group to engage with other governments whose exporters have a keen interest in the functioning of CBAM.  

The draft primary legislation published 24 April 2025 will be open for technical consultation until 11:59pm on 3 July 2025. We welcome responses from all interested stakeholders, including international partners. The government will review the responses to the consultation and will introduce the primary legislation for CBAM later this year. In advance of the implementation of CBAM, the government will also publish delegated legislation in draft for technical consultation.

HMRC will develop a comprehensive communications package and detailed guidance, which the government recognises is essential for liable persons to comply with their obligations as well as for overseas operators and verifiers to support the liable person in meeting these new requirements.

Annex: Commodity codes within scope of CBAM

Aluminium  

Combined Nomenclature (CN) code and description	Greenhouse gases
7601 – Unwrought aluminium	Carbon dioxide and perfluorocarbons
7603 – Aluminium powders and flakes	Carbon dioxide and perfluorocarbons
7604 – Aluminium bars, rods and profiles	Carbon dioxide and perfluorocarbons
7605 – Aluminium wire	Carbon dioxide and perfluorocarbons
7606 – Aluminium plates, sheets and strip, of a thickness exceeding 0,2 mm	Carbon dioxide and perfluorocarbons
7607 – Aluminium foil (whether or not printed or backed with paper, paper-board, plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0,2 mm	Carbon dioxide and perfluorocarbons
7608 – Aluminium tubes and pipes	Carbon dioxide and perfluorocarbons
7609 00 00 – Aluminium tube or pipe fittings (for example, couplings, elbows, sleeves)	Carbon dioxide and perfluorocarbons
7610 – Aluminium structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge-sections, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, balustrades, pillars and columns); aluminium plates, rods, profiles, tubes and the like, prepared for use in structures	Carbon dioxide and perfluorocarbons
7611 00 00 – Aluminium reservoirs, tanks, vats and similar containers, for any material (other than compressed or liquefied gas), of a capacity exceeding 300 litres, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment	Carbon dioxide and perfluorocarbons
7612 – Aluminium casks, drums, cans, boxes and similar containers (including rigid or collapsible tubular containers), for any material (other than compressed or liquefied gas), of a capacity not exceeding 300 litres, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment	Carbon dioxide and perfluorocarbons
7613 00 00 – Aluminium containers for compressed or liquefied gas	Carbon dioxide and perfluorocarbons
7614 – Stranded wire, cables, plaited bands and the like, of aluminium, not electrically insulated	Carbon dioxide and perfluorocarbons
7616 – Other articles of aluminium	Carbon dioxide and perfluorocarbons

Cement    

CN code and description	Greenhouse gas
2507 00 80 – Other kaolinic clays	Carbon dioxide
2523 10 00 – Cement clinkers	Carbon dioxide
2523 21 00 – White Portland cement, whether or not artificially coloured	Carbon dioxide
2523 29 00 – Other Portland cement	Carbon dioxide
2523 30 00 – Aluminous cement	Carbon dioxide
2523 90 00 – Other hydraulic cements	Carbon dioxide

Fertilisers    

CN code and description	Greenhouse gas(es)
2808 00 00 – Nitric acid; sulphonitric acids	Carbon dioxide and nitrous oxide
2814 – Ammonia, anhydrous or in aqueous solution	Carbon dioxide
2834 21 00 – Nitrates of potassium	Carbon dioxide and nitrous oxide
3102 – Mineral or chemical fertilisers, nitrogenous	Carbon dioxide and nitrous oxide
3105 – Mineral or chemical fertilisers containing 2 or 3 of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers; goods of this chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg
Except: 3105 60 00 – Mineral or chemical fertilisers containing the 2fertilising elements phosphorus and potassium	Carbon dioxide and nitrous oxide

Hydrogen

CN code and description	Greenhouse gas
2804 10 00 – Hydrogen	Carbon dioxide

Iron and steel

CN code and description	Greenhouse gas
2601 12 00 – Agglomerated iron ores and concentrates, other than roasted iron pyrites	Carbon dioxide
72 – Iron and steel	Carbon dioxide
Except: 7202 2 – Ferro-silicon	Carbon dioxide
Except: 7202 30 00 – Ferro-silico-manganese	Carbon dioxide
Except: 7202 50 00 – Ferro-silico-chromium	Carbon dioxide
Except: 7202 70 00 – Ferro-molybdenum	Carbon dioxide
Except: 7202 80 00 – Ferro-tungsten and ferro-silico-tungsten	Carbon dioxide
Except: 7202 91 00 – Ferro-titanium and ferro-silico-titanium	Carbon dioxide
Except: 7202 92 00 – Ferro-vanadium	Carbon dioxide
Except: 7202 93 00 – Ferro-niobium	Carbon dioxide
Other: 7202 99 10 – Ferro-phosphorus	Carbon dioxide
Other: 7202 99 30 – Ferro-silico-magnesium	Carbon dioxide
Other: 7202 99 80 – Other	Carbon dioxide
Other: 7204 – Ferrous waste and scrap; remelting scrap ingots and steel	Carbon dioxide
7301 – Sheet piling of iron or steel, whether or not drilled, punched or made from assembled elements; welded angles, shapes and sections, of iron or steel	Carbon dioxide
7302 – Railway or tramway track construction material of iron or steel, the following: rails, check-rails and rack rails, switch blades, crossing frogs, point rods and other crossing pieces, sleepers (cross-ties), fish- plates, chairs, chair wedges, sole plates (base plates), rail clips, bedplates, ties and other material specialised for jointing or fixing rails	Carbon dioxide
7303 00 – Tubes, pipes and hollow profiles, of cast iron	Carbon dioxide
7304 – Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel	Carbon dioxide
7305 – Other tubes and pipes (for example, welded, riveted or similarly closed), having circular cross-sections, the external diameter of which exceeds 406,4 mm, of iron or steel	Carbon dioxide
7306 – Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similarly closed), of iron or steel	Carbon dioxide
7307 – Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel	Carbon dioxide
7308 – Structures (excluding prefabricated buildings of heading 9406 ) and parts of structures (for example, bridges and bridge-sections, lock- gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns), of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel	Carbon dioxide
7309 00 – Reservoirs, tanks, vats and similar containers for any material (other than compressed or liquefied gas), of iron or steel, of a capacity exceeding 300 l, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment	Carbon dioxide
7310 – Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 l, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment	Carbon dioxide
7311 00 – Containers for compressed or liquefied gas, of iron or steel	Carbon dioxide
7318 – Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel	Carbon dioxide
7326 – Other articles of iron or steel	Carbon dioxide

1. The ‘UK CBAM’ will be referred to as ‘CBAM’ from this point onwards. When referencing other jurisdictions’ CBAMs, this will be noted explicitly. ↩