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Carbon Border Adjustment Mechanism (CBAM): What Importers Should Do Now in the UK
A new CBAM enters force from 1 January 2027 targeting fertiliser, cement, steel and more — here’s how UK businesses can prepare to avoid penalties.
By NomadicTax Research Team • 5-8 min read • May 28, 2026
## Overview of CBAM
The **Carbon Border Adjustment Mechanism (CBAM)** will take effect **1 January 2027**, introduced via the Finance Act 2025-26. ([gov.uk](https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-cbam-policy-summary/carbon-border-adjustment-mechanism-cbam-policy-summary?utm_source=openai)) The policy ensures that UK importers of certain carbon-intensive goods face a carbon price comparable to domestic producers. Very relevant to sectors like aluminium, cement, fertiliser, hydrogen, and iron & steel. ([gov.uk](https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-cbam-policy-summary/carbon-border-adjustment-mechanism-cbam-policy-summary?utm_source=openai))
## Who Will Be in Scope
- Businesses that import **£50,000 or more** per year of specified goods from those sectors. ([gov.uk](https://www.gov.uk/government/publications/introduction-of-carbon-border-adjustment-mechanism/carbon-border-adjustment-mechanism?utm_source=openai))
- Also, **downstream producers** relying on inputs from these sectors (e.g. using fertiliser, iron, steel imported) may have indirect impact.
- Overseas producers who export into the UK may be required to provide emissions data or forfeit certain benefits.
## Key Requirements and Features
- Importers must **register** and submit emissions data, keep records, and account for CBAM duties. ([gov.uk](https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-cbam-policy-summary/carbon-border-adjustment-mechanism-cbam-policy-summary?utm_source=openai))
- The CBAM rate will be based on costs seen under the UK ETS, adjusted for free allowances and other policy mechanisms. ([gov.uk](https://www.gov.uk/government/publications/introduction-of-carbon-border-adjustment-mechanism/carbon-border-adjustment-mechanism?utm_source=openai))
- Indirect emissions (from upstream supply chains) are **not** in scope on introduction, with some possibility for later inclusion. ([gov.uk](https://www.gov.uk/government/publications/factsheet-carbon-border-adjustment-mechanism-cbam/factsheet-carbon-border-adjustment-mechanism/?utm_source=openai))
## Actionable Steps for Businesses
1. **Assess exposure**: Calculate annual imports of goods from the impacted sectors. Determine whether you surpass the £50,000 threshold.
2. **Track emissions data**: If you import goods from these sectors, collect data on embodied carbon, country of origin emissions, and UK ETS pricing/freight emissions.
3. **Register with HMRC**: When registration opens, ensure compliance with submission timelines under new secondary legislation. Failures may lead to penalties.
4. **Review supply chain contracts**: Contracts may need including clauses that share emissions data from overseas suppliers, or that pass through CBAM costs.
5. **Budget for CBAM Duties**: Since costs will apply to imports from 2027, plan your pricing, margins, and cost structure accordingly.
## Examples
| Company | Sector | Impact | Possible Strategy |
|--|--|--|--|
| A UK fertiliser importer bringing in £100,000/year of nitrogen fertiliser | Fertiliser sector | In scope; must register, report emissions, pay the duty | Change supply routes, purchase from lower-carbon sources, increase margin to pass cost to buyer |
| Steel user manufacturing machinery | Steel inputs from overseas | Indirect exposure (if steels are affected) | Seek suppliers with robust emissions reporting, adjust BOMs accordingly |
## Implications for Global and Regulatory Strategy
- Raises costs of high-carbon imports thereby incentivising lower carbon production overseas.
- May lead to trade negotiations disputes; ensure compliance documentation is robust.
- Potentially affects pricing competitiveness — exporters from low-carbon jurisdictions may gain advantage.
## Summary
CBAM represents **one of the most significant trade & climate tax reforms** entering UK law in recent years. For any business importing carbon-intensive goods (especially fertiliser, steel, cement, hydrogen), begin planning now to ensure compliance, optimize your supply chain, and manage costs. The time to act is already—**register your systems, adjust contracts, and gather emissions data before 1 January 2027**.