The UK Carbon Border Adjustment Mechanism (CBAM) begins in January 2027, when the UK starts putting a carbon price on certain imported steel and aluminium goods. If you buy fasteners, fittings or fabricated metal parts from overseas, then you’ve probably been preparing for it already. At Acorn, because these products are core to our supply chain services, we’re well prepared: we’ve integrated CBAM readiness into our systems and processes. Even so, you may want an up-to-date picture of where the legislation stands, and where we stand as a supplier of these items within our supply chain services.
What changes in 2027
From 1 January 2027, importers above the registration threshold become liable for a carbon charge on goods from five sectors: iron and steel, aluminium, cement, fertiliser and hydrogen (although previously proposed, glass and ceramics aren’t included at launch). The new legislation’s aim is to reduce carbon leakage (where production and related emissions move to countries with weaker carbon pricing).
The CBAM charge is based on the emissions released when the goods were made. At launch, this means direct production emissions, including those from key input materials. Emissions from purchased electricity are so far excluded until 2029 at the earliest.
Rates move every quarter. The government sets one rate for each sector, and HMRC then publishes it officially for implementation. The first legally effective rates, for January to March 2027, are due before the end of 2026 (check the official HMRC website for up-to-date rates). HMRC’s October figures give a sense of scale: £9.69 per tonne of CO2 equivalent for iron and steel, and £9.79 for aluminium. They’re illustrative only, so treat them as planning assumptions rather than final prices.
The rate isn't simply the UK carbon price; it’s adjusted for the free allowances UK producers still receive. If a qualifying carbon price has already been paid in the producing country, Carbon Price Relief may reduce the bill, but it must be backed by a verified carbon pricing verification form.
* Some details may change before CBAM is introduced, so check HMRC’s website for the latest official guidance
Commodity codes to follow
Goods are classified by code, and this is what's processed for CBAM. A product that contains steel or aluminium isn’t automatically covered; what matters is how the imported item itself is classified, and whether that code appears on HMRC’s lists.
Codes for everyday production components include:
- 7318: screws, bolts, nuts, washers and similar fixings of iron or steel
- 7326: other articles of iron or steel
- 7616: other articles of aluminium
- 7609 00 00: aluminium tube and pipe fittings, such as couplings, elbows and sleeves
Start with your own import data. List the codes you bring in and check each one against HMRC’s sector lists.
Know the importer
For CBAM, the importer carries the liability. If a customs agent or broker completes the import declaration on your behalf, you’re still classed as the importer: you can use an agent, but the liability stays with you.
Whether you must register depends on a £50,000 threshold, based on the value of your CBAM goods. HMRC applies two tests:
- Looking back: on the first day of each month, did your CBAM imports over the previous 12 months reach £50,000? Imports before 2027 don’t count.
- Looking ahead: do you expect to import £50,000 or more in the next 30 days?
The total covers all your in-scope imports, across every supplier and sector. Below the threshold you don’t need to register. You do still need records. Anyone importing CBAM goods from 1 January 2027 must keep them (penalties apply for incomplete records and late registration).
If you buy from a UK supplier named as the importer on the customs declaration, that supplier is liable and handles the return. Check your delivery terms, though: on delivered duty paid (DDP) terms, an overseas seller can act as the importer. Either way, CBAM costs may come through in your prices, so confirm with your supplier.
Verified data can be a problem
To use actual emissions figures, an importer needs data monitored by the UK method and checked by an independent, accredited verifier. The evidence is a verification report, or a product-specific verification summary, which the producer passes to the importer.
Some manufacturers can’t supply this yet (as we've seen in our own practical preparations). Verified data covers a calendar-year monitoring period, but for 2027 imports you can use verified 2026 data if 2027 data isn’t yet available. Verification takes time and needs an eligible verifier, so this needs to be built into your schedule. If your supplier can’t provide it, find out exactly what’s missing: the figures themselves, the right reporting period, or the verification.
Where actual data isn’t available, importers must use HMRC’s official default values. These were published in draft on 16 October 2026, to apply from 1 January 2027. For 2027 and 2028 there is one default per product, whatever its origin, with a 10% markup built in for every sector except fertiliser.
Regarding incomplete data:
- Missing data doesn’t mean zero emissions.
- Missing data doesn’t stop you importing: you can use a default value instead.
- Defaults include a markup, so they will often produce a higher charge than good verified data.
Compare both routes before you commit to a price or a sourcing change. A return filed using defaults can’t later be amended to use actual data.
Significant planning dates
- 13 November 2026: feedback on HMRC’s technical guidance for monitoring, reporting and verifying emissions closes.
- By end of 2026: first legally effective rates published, for January to March 2027 (not yet published at 3 November).
- 1 January 2027: UK CBAM starts. Keep records from your first in-scope import.
- 1 January 2028: registration opens. If you crossed the threshold during 2027, register by 31 January 2028.
- 31 May 2028: first return and payment, covering 2027 imports.
Quarterly returns follow from 2028, with the first due on 31 July 2028. Registration opens a year after the start date, but that doesn’t delay anything: 2027 imports are still chargeable.
OEM buyer points to consider
Key points for OEM buyers to consider in their CBAM process.
1. Scope and responsibility
Which of your imported inputs and components are covered, and who is the importer for each? Check the commodity code and how each purchase is transacted. The liable person is normally the importer named on the customs declaration, which can be a business based outside the UK.
2. Supplier evidence
If a supplier can’t provide data, find out exactly what’s missing. It could be which installation made the goods, the emissions figures, the right reporting period, or the verification. Agree who will get it, and by when.
3. Landed cost and pricing
Does the quote include CBAM costs, and what emissions and rate assumptions sit behind it? Rates change each quarter, and suppliers may switch from defaults to verified data for later shipments. Ask how either would change the price, and check whether you’d need to pass that change on to your own customers.
4. Contracts
Are data responsibilities, deadlines, change notifications and cost adjustments written into your agreements? Take contractual and tax questions to your legal or tax advisers.
5. Production continuity
If a data gap persists, compare your options. You can keep the supplier and use defaults, help them improve their evidence, or qualify an alternative. Weigh quality, lead time and delivery record alongside the carbon cost. Re-qualifying a critical component takes time, and your priority is still parts when and where you need them.
EU CBAM is a different issue (for now)
EU CBAM has been in effect since 1 January 2026, and EU importers bear that obligation. Their first annual declaration is due on 30 September 2027. If you export in-scope goods to the EU, expect customers there to ask you for emissions data and evidence of any carbon price already paid. The thresholds differ, too. The EU uses 50 tonnes of covered goods a year rather than a value, with hydrogen and electricity always in scope, so the same goods can be in scope in one regime and out of scope in the other.
The UK and EU are working to link their emissions trading systems (ETS), which could lead to mutual CBAM exemptions. Negotiators reportedly reached a linking deal in October, but it hasn’t been confirmed and reportedly depends on a wider package. No CBAM exemption applies for now: HMRC lists no exempt countries. The next UK and EU summit in Brussels in late November 2026 may materially change this.
Our services help your CBAM processing and compliance
Many of the products we supply are in scope from January. We’re prepared, and we’re keeping track of every update to the legislation. If you’d like to talk through how CBAM affects the components we supply you, we’ll take you through how we’ve prepared to help you with compliance in your business.
