What is CBAM?

A new tax – CBAM - will apply to specified goods in certain sectors that are imported into the UK on or after 1 January 2027. The CBAM sectors are: aluminium; cement; fertiliser; hydrogen; and iron and steel.

The Finance Act 2026 provides the core framework for CBAM, with the details set out in regulations, notices that have the force of law and HMRC guidance (see HMRC’s CBAM collection page). HMRC is continuing to publish guidance and engage with businesses ahead of CBAM on 1 January 2027.

Calculating liabilities under CBAM 

Several factors are relevant in calculating the CBAM liability for goods, including  

• the rate for the CBAM sector; and
• the emissions embodied within the goods. This can be based on either:
  • actual data; or
  • default values determined by the government. 

In October 2026, the government published: 

• guidance setting out illustrative CBAM rates; 
• the default values that will be in place for 2027 and 2028; and
• a draft technical guide.  

Together, these publications provide businesses with their first opportunity to estimate potential UK CBAM liabilities using the government’s proposed methodology and default emissions values. Further, HMRC has launched an online service that businesses can use to ask questions about CBAM.  

CBAM rates 

CBAM is different from most other taxes in that its rates are not set out in the legislation. Instead, the legislation provides the methodology for calculating the appropriate CBAM rate. HMRC’s guidance explains how CBAM rates are calculated to help businesses understand how future rates will be set. It also includes a worked example.  

The figures presented in the guidance are illustrative only and represent the rates that would apply from 1 January 2027 based on current data. HMRC says that the CBAM rates that will generate a liability from 1 January to 31 March 2027 will be published before the end of 2026. The rates will be updated and published quarterly to reflect changes in the data.  

Default values 

The government anticipates that businesses will use default values when actual emissions data is unavailable.  

Key points to note include that: 

• where default values are used in a submitted CBAM return, the return cannot be amended later for actual emissions data; and
• default values can be used for precursor and final CBAM goods (precursor goods are those used to make final goods). However, it is not possible to use actual emissions data for precursor goods and default values for final goods.  

At the same time as publishing the values for 2027 and 2028, the government committed to introducing country-specific default values from 2029.  

Draft technical guide 

The technical guide provides information on the monitoring, reporting and verification requirements for CBAM. HMRC says that it is working to improve the guide and that it will update the guide “as necessary to reflect further technical analysis and stakeholder feedback”. 

Any feedback should be sent to HMRC’s dedicated mailbox on or before 13 November 2026. The email subject line should include ‘MRV technical guidance feedback’.