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The Finance Act 2026 inserts the new UK CBAM as a chargeable border duty administered by HMRC. The headline architecture:
sectors, indirect) emissions of imports of in-scope goods. Importers self-assess via HMRC returns; default emission factors apply where actual installation-level data is unavailable or unverified.
HMRC publishing the applicable CBAM rate on a quarterly basis. This is one of the key UK/EU divergences — the UK ETS has historically traded at a different (often lower) price than the EU ETS, so equivalent goods will face different effective carbon costs at the UK vs EU border.
prices already paid (e.g., China ETS, EU ETS for re-exports). The methodology is set out in the CBAM (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026.
2025-Q4 reporting-only window, the UK regime begins as a pay-on-import system from day one (1 January 2027). Importers therefore need verified emissions data ready at go-live; the consultation cycle is the only pre-implementation runway.
hydrogen (anhydrous and in solution), and iron & steel (ores, primary products, tubes, structures, fasteners). Scrap is excluded. Electricity is not in scope at launch — a deliberate divergence from the EU CBAM, reflecting the limited cross-border GB power flows and the GB/NI Single Electricity Market complications.
legislation (under consultation) to avoid penalising occasional importers.
consultation papers, an estimated 60% of in-scope UK imports come from China, India, Turkey, and Russia — i.e., jurisdictions with materially higher carbon intensities than the UK ETS-linked benchmark. These four are the principal affected exporters; ASEAN steel and Gulf aluminium are smaller but non-trivial.
from 2026-01-01; once UK CBAM is live (2027-01-01), each direction is governed by a separate regime with separate methodologies. UK steel and aluminium producers selling into the EU benefit from the UK ETS price being recognised under the EU CBAM carbon-price-relief mechanism (and vice versa), but the calculation methodologies differ. Expect material compliance-cost duplication for UK firms doing two-way trade.
the UK has used border-tax authority to project domestic climate policy onto third-country producers. It is conceptually a cousin to industrial-policy instruments rather than a classical tariff (the rate floats with the UK ETS, not a Schedule rate), but it functions as a tariff-equivalent at the customs frontier and is filed here under action_type: tariff consistent with how the EU CBAM definitive phase is classified in this register.
auction-clearing price. UK ETS reform (free-allowance phase-out aligned with the UK CBAM's domestic-leakage backstop) is the companion domestic-side instrument.
British Steel (Jingye), CF Industries (Billingham), Hanson UK / Heidelberg Materials UK on the receiving side; large suppliers from China (Baosteel, Hbis, Chalco), India (Tata Steel, Hindalco, JSW), Turkey (Erdemir, Tosyalı), and Russia (where remaining flows persist post-sanctions) on the exporter side.
for UK ETS price averaging — under consultation in the second tranche.
automatic (mirroring the EU CBAM Implementing Regulation's allow-list) or case-by-case verified.
the first tranche signals direct-only, with indirect added in a later phase as in the EU.
(EUR 150/consignment) or higher, materially affecting SME compliance burden.
on imports raises landed cost for UK fabricators, potentially offsetting the carbon-leakage protection that domestic producers gain.