The government has published the draft secondary legislation for the UK’s Carbon Border Adjustment Mechanism (CBAM), which is due to go live on 1 January 2027. This is an important development for UK businesses importing affected materials.
What is CBAM?
CBAM has already been introduced in the EU and will apply a carbon price to certain imported goods to reduce the risk of “carbon leakage”. This is the concern that emissions-intensive production simply shifts overseas when the UK tightens its own environmental standards.
UK importers of goods from the aluminium, cement, fertilisers, hydrogen, and iron and steel sectors as well as downstream producers that use these goods in their supply chains are likely to be affected by CBAM.
CBAM is scheduled to begin on 1 January 2027, and the primary legislation for this has already been included in Finance Bill 2025-26. The new draft rules include the legislative requirements that are associated with administering the tax.
What the draft rules cover
The draft legislation includes details on:
- Calculation of the CBAM rate.
- The availability of carbon price relief that can reduce the amount of CBAM charged.
- The administrative requirements relating to registration for CBAM
- What information must be included on CBAM tax returns and related record keeping.
- Details on the reimbursement arrangements.
- How the weight of a CBAM good will be defined and record keeping.
- What records importers need to keep
In short, if you import goods that are affected by CBAM, these rules give you a look at the administrative workload CBAM will introduce.
What’s next?
The documents are open for technical consultation until 24 March 2026, and HMRC is looking for feedback on whether the draft rules are workable in practice.
To review the draft rules and the consultation in full, see:
Andy Burnham’s first days as Prime Minister have been marked by a flurry of announcements designed to show that his government intends to move quickly. Presenting himself as a leader focused on easing pressure on households and rebuilding trust in politics, Burnham has begun reshaping government while signalling the priorities that will define his administration.
HMRC have opened a consultation, ‘Modernising the taxation of distributions and repayments of capital from companies’. They are seeking views on proposals to modernise the tax framework dealing with distributions made by companies to shareholders who are individuals or trusts.
