Who pays, and when
The importer pays. In law that is the person in whose name the UK customs declaration is made. A Greek mill selling on delivered duty paid terms is therefore the liable person itself; on ex works or delivered at place terms, the UK buyer is.
An importer must register once its CBAM goods reach 50,000 pounds of customs value: over the past 12 months, checked on the first day of each month, or expected over the next 30 days. Only imports from 1 January 2027 count.
| Charge applies to goods imported from | 1 January 2027 |
|---|---|
| Quarterly rate for January to March 2027 published | Before 31 December 2026 |
| Registration opens | 1 January 2028 |
| Registration deadline for importers liable during 2027 | 31 January 2028 |
| First return and payment, covering all of 2027 | 31 May 2028 |
| Quarterly returns from | 1 January 2028; January to March 2028 due 31 July 2028 |
Source: HMRC, CBAM policy summary, updated 16 October 2026, sections 6 and 7; HMRC, rates for the CBAM, 16 October 2026, read 19 October 2026.
How the charge is worked out
The charge is the embodied emissions times the UK CBAM rate, less any carbon price already paid abroad.
Embodied emissions are the tonnes imported times an emissions intensity. The importer uses either the producer's verified actual intensity or HMRC's default value. Defaults are one figure per commodity code, whatever the country of origin, and cover direct emissions only. A return filed on default values cannot later be amended with actual data.
The UK CBAM rate is set per sector each quarter. It starts from the average UK ETS auction price of the previous quarter. It then nets off the share of UK producers' emissions still covered by free allowances. For the quarter to September 2026, the auction average was 58.15 pounds a tonne of carbon dioxide. UK cement producers receive free allowances for 87.1% of their emissions, scaled by a 2027 phase-out factor of 97.5%. So the cement rate is 58.15 × (1 − 87.1% × 97.5%) = 8.78 pounds a tonne.
| Sector | Rate | Implied free-allowance share | Change per £10 move in the UK ETS price |
|---|---|---|---|
| Aluminium | £9.79 | 85% | £1.68 |
| Iron and steel | £9.69 | 85% | £1.67 |
| Cement | £8.78 | 87% | £1.51 |
| Fertiliser | £1.45 | 100% | £0.25 |
Source: HMRC, illustrative CBAM rates and worked example, 16 October 2026, read 19 October 2026. Free-allowance share for sectors other than cement, and the sensitivity, are Pragmon AI calculations from the published rates. The rates are illustrative; the binding January to March 2027 rates use October to December 2026 prices.
The relief. If the goods already paid a qualifying carbon price, the importer deducts it. The EU ETS is on HMRC's list of qualifying schemes. Emissions covered by EU free allowances earn no relief, because nothing was paid on them. The relief needs a carbon pricing verification form from the producing plant, signed by an accredited verifier.
What it costs per tonne
| Product (commodity code) | Default value (tCO2e a tonne) | 2027, at £58.15 | At £40 | At £80 | At the full UK ETS price, no free allowances |
|---|---|---|---|---|---|
| Primary aluminium, unwrought (7601 10 90) | 2.136 | £20.9 (€24) | £14.4 | £28.8 | £124 |
| Aluminium extrusion, solid alloy profile (7604 29 90) | 4.014 | £39.3 (€46) | £27.0 | £54.1 | £233 |
| Hot-rolled coil, 4.75 to 10 mm (7208 37 00) | 3.314 | £32.1 (€38) | £22.1 | £44.2 | £193 |
| Rebar (7214 20 00) | 3.040 | £29.5 (€34) | £20.3 | £40.5 | £177 |
| Portland cement (2523 29 00) | 1.375 | £12.1 (€14) | £8.3 | £16.6 | £80 |
Source: HMRC, aluminium, iron and steel, and cement default values, 16 October 2026; rates from Figure 2; Pragmon AI calculation, read 19 October 2026. Euros at the ECB average of 0.856 pounds a euro for July to September 2026.
The charge is small in 2027 because UK producers still get 85% or more of their allowances free. It grows about sixfold as those allowances go. The UK regulations tie the phase-out factor to the EU's schedule, which reaches zero in 2034 under current EU law. At the 2030 factor of 51.5%, the extrusion charge would be about 131 pounds a tonne at today's price.
The default values are high. An extrusion's default of 4.0 tonnes of carbon dioxide a tonne carries its billet and a margin of caution. Every tonne of carbon dioxide a producer can prove below the default saves 9.79 pounds a tonne of metal in 2027.
What it does to margin
It is the same base company as every Insights post, 100 million euros of revenue at a 10% cash profit margin, here an aluminium extruder that sells 15% of its output in the UK. The typical exporter sells at 5,200 euros a tonne, so it ships about 2,900 tonnes a year to the UK.
| Case | Euros a tonne | Cost a year | Margin points |
|---|---|---|---|
| 2027, default value | €46 | €0.13 million | −0.13 |
| 2027, verified intensity at half the default | €23 | €0.07 million | −0.07 |
| 2027, default, UK ETS at £80 | €63 | €0.18 million | −0.18 |
| 2030 phase-out factor, default, today's price | €153 | €0.44 million | −0.44 |
| No UK free allowances, default, today's price | €273 | €0.79 million | −0.79 |
Source: Pragmon AI calculation from Figures 2 and 3, read 19 October 2026. Assumptions in the note at the end.
For a UK buyer the arithmetic is the same from the other side. Imported extrusion costs 39 pounds a tonne more in 2027 unless the supplier proves lower emissions or claims relief.
What an exporter can do
Contract terms. Name who is the importer of record and who bears the charge. On delivered duty paid terms the exporter registers, files and pays; elsewhere, agree a CBAM clause that passes the published quarterly rate through at cost.
Actual emissions. Get the plant's 2027 emissions intensity verified to the UK rules. These are designed to work alongside the EU CBAM method, so one monitoring system can serve both.
The EU ETS deduction. Check the plant's EU allowances against its verified emissions in the EU registry. At July to September 2026 prices, a plant that paid for more than 14% of its emissions owes the UK nothing on aluminium or steel. A plant fully covered by free allowances gets no relief.
Price list. Quote UK prices with the CBAM charge as a separate line that resets each quarter, so the rise from 2028 onwards passes through.
UK CBAM against EU CBAM
| Feature | UK CBAM | EU CBAM |
|---|---|---|
| Charge starts | 1 January 2027 | 1 January 2026 |
| Threshold | £50,000 of imports a year | 50 tonnes of imports a year |
| How it is paid | Tax return to HMRC | CBAM certificates, sold from 1 February 2027 |
| First payment | 31 May 2028, for 2027 | 30 September 2027, for 2026 |
| Price | UK ETS auction average, quarterly, net of free allowances | EU ETS auction price, quarterly in 2026 and weekly from 2027 |
| Free-allowance adjustment | Inside the rate | Deducted from emissions, by benchmark |
| Default values | One per product, any origin | Set by country of origin |
| Emissions covered | Direct only | Direct; indirect also for cement and fertiliser |
| Electricity | Out of scope | In scope |
Source: HMRC, CBAM policy summary, 16 October 2026; Regulation (EU) 2023/956, consolidated to 20 October 2025: Articles 6(1), 7(1), 20(1), 21(1) and 21(1a), 31, Annex II, Annex IV point 4.1, Annex VII, 16 October 2026; read on EUR-Lex 19 October 2026.
The linking question. If the UK and EU link their emissions trading systems, goods from each side would be exempt from the other's CBAM. Finance Act 2026, section 156, already lets the Treasury make that exemption. No agreement has been signed. The Prime Minister told the House of Commons on 12 October 2026 that a deal on emissions trading is on the table at the UK-EU summit in Brussels on 20 November. Even a signed deal needs EU and UK legislation before it applies, so EU goods should plan to pay from 1 January 2027.
The typical exporter
| Revenue | 100 million euros |
|---|---|
| Cash profit margin | 10% |
| Product | Aluminium extrusion, solid alloy profile (7604 29 90) |
| UK share of sales | 15% (15 million euros) |
| Realised price | 5,200 euros a tonne, our estimate. Built from LME cash aluminium at 2,808 euros (July to September 2026 average, World Bank Pink Sheet, converted at ECB monthly rates), the European billet premium at 951 euros (Fastmarkets, 6063 billet delivered North Germany, 1,070 to 1,135 dollars on 28 August 2026) and a conversion premium of 1,439 euros (Eurostat trade values for solid aluminium alloy profiles, April to June 2026, less metal and billet). Total 5,198 euros, rounded |
| Emissions intensity | HMRC default, 4.014 tonnes of carbon dioxide equivalent a tonne |
| Relief claimed | None |
| Pass-through to the UK buyer | None |
Source: Pragmon AI typical exporter, 19 October 2026.
Arithmetic
Tonnes to the UK: 15 million euros ÷ 5,200 euros = 2,885 tonnes. The 2027 charge is 0.9% of the 5,200 euro price (45.9 ÷ 5,200).
2027 charge: 4.014 × 9.79 pounds = 39.30 pounds a tonne ÷ 0.856 = 45.9 euros. × 2,885 tonnes = 0.132 million euros = 0.13 points of 100 million euros.
Half the default: 2.007 × 9.79 = 19.65 pounds = 23.0 euros a tonne; 0.066 million euros.
UK ETS at 80 pounds: rate 80 × 0.1684 = 13.47 pounds; 4.014 × 13.47 = 54.06 pounds = 63.2 euros a tonne; 0.18 million euros.
2030 factor: aluminium free-allowance share 85.3% (from 1 − 9.79 ÷ 58.15 = 0.8316, ÷ 0.975). Rate 58.15 × (1 − 85.3% × 51.5%) = 32.61 pounds. × 4.014 = 130.9 pounds = 152.9 euros a tonne; 0.44 million euros.
No free allowances: 4.014 × 58.15 = 233.4 pounds = 272.7 euros a tonne; 0.79 million euros.
Relief breakeven: UK aluminium rate 9.79 pounds = 11.44 euros. EU auction average July to September 2026, 82.18 euros. 11.44 ÷ 82.18 = 13.9% of emissions paid for.
Realised price, our estimate: LME cash, World Bank Pink Sheet monthly averages July 3,161, August 3,251, September 3,283 dollars a tonne; at ECB monthly averages 1.1417, 1.1593, 1.1513 dollars a euro that is 2,769, 2,804 and 2,852 euros, mean 2,808. Billet premium: Fastmarkets 6063 extrusion billet, delivered North Germany, 1,070 to 1,135 dollars on 28 August 2026, midpoint 1,102.5 dollars ÷ 1.1593 = 951 euros. Conversion premium: Eurostat Comext, EU27 intra-EU arrivals of solid aluminium alloy profiles (CN 7604 29 90), April to June 2026, 1,098 million euros over 201,000 tonnes = 5,459 euros a tonne; less LME 3,067 euros (April to June average) and Hydro's Q2 extrusion ingot premium of 1,109 dollars ÷ 1.1632 = 953 euros; remainder 1,439 euros. Sum 2,808 + 951 + 1,439 = 5,198, rounded to 5,200. Cross-check: Eurostat extra-EU imports of the same code, 5,545 euros a tonne in July and 5,402 in August 2026 (mean 5,470); intra-EU arrivals in July 5,688 euros. The estimate sits 5% below imports because the trade code includes finished and coated profiles.
Exchange rate: ECB monthly averages July 0.8539, August 0.8561, September 0.8581 pounds a euro; mean 0.856.
Note on what is not yet final
The rates in this post are HMRC's illustrative rates. The binding rates for January to March 2027 will use the October to December 2026 UK ETS auction average and final free-allowance data, and are due before the end of 2026. UK allowances settled at 62.97 pounds on 16 October 2026; if that level holds for the quarter, every rate above rises by about 8%. The default values are published and replicate HMRC's Force of Law notice. HMRC has not yet published the year-by-year UK phase-out factors beyond 2027; the 2030 case uses the EU schedule that the UK regulations reference.
Questions people ask
When does UK CBAM start?
On 1 January 2027, for goods imported from that day. The first return and payment, covering all of 2027, are due on 31 May 2028.
Who pays UK CBAM?
The importer of record in the UK. That is the UK buyer on most terms, and the overseas seller when it sells delivered duty paid.
How is the UK CBAM charge calculated?
Tonnes imported, times the emissions intensity (actual verified or HMRC's default), times the sector's quarterly UK CBAM rate, less any carbon price already paid abroad.
Does UK CBAM apply to imports from the EU?
Yes, until a UK-EU emissions trading link is agreed and written into law. Carbon paid under the EU ETS can be deducted, but emissions covered by EU free allowances cannot.
What will UK CBAM cost per tonne?
In 2027, at HMRC's illustrative rates and default values: about 21 pounds a tonne of primary aluminium, 39 pounds for an extrusion, 32 pounds for hot-rolled coil, 29 pounds for rebar and 12 pounds for cement.
Sources
- HMRC, Carbon Border Adjustment Mechanism (CBAM): policy summary, updated 16 October 2026. https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-cbam-policy-summary/carbon-border-adjustment-mechanism-cbam-policy-summary
- HMRC, CBAM: illustrative CBAM rates and worked example, 16 October 2026. https://www.gov.uk/government/publications/illustrative-cbam-rates-and-worked-example-for-carbon-border-adjustment-mechanism-cbam/carbon-border-adjustment-mechanism-cbam-illustrative-cbam-rates-and-worked-example
- HMRC, Rates for the Carbon Border Adjustment Mechanism (CBAM), 16 October 2026. https://www.gov.uk/guidance/rates-for-the-carbon-border-adjustment-mechanism-cbam
- HMRC, Check the default values for the CBAM: aluminium, iron and steel, cement, fertilisers, 16 October 2026. https://www.gov.uk/government/publications/check-the-default-values-for-the-carbon-border-adjustment-mechanism-cbam
- HMRC, Getting the emissions intensity when importing CBAM goods, 16 October 2026. https://www.gov.uk/guidance/getting-the-emissions-intensity-when-importing-carbon-border-adjustment-mechanism-cbam-goods
- HMRC, CBAM: list of current qualifying carbon pricing schemes, 27 August 2026 (information as of 19 June 2026). https://www.gov.uk/government/publications/uk-cbam-current-qualifying-carbon-pricing-schemes
- Finance Act 2026, Part 5, including section 156. https://www.legislation.gov.uk/ukpga/2026/11/part/5
- The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026/809), regulations 4, 11 and 12. https://www.legislation.gov.uk/uksi/2026/809/contents/made
- EEX, EU ETS primary market auction report 2026, T3PA auctions to 19 October 2026. https://public.eex-group.com/eex/eua-auction-report/emission-spot-primary-market-auction-report-2026-data.xlsx (read 19 October 2026)
- European Central Bank, euro reference rate, pound sterling, monthly average, July to September 2026. https://data.ecb.europa.eu/data/datasets/EXR (read 19 October 2026)
- World Bank, Commodity Price Data (Pink Sheet), aluminium, monthly averages July to September 2026 (read through Pragmon AI indicator worldbank-aluminium-usd-t, 19 October 2026)
- Fastmarkets, European aluminium billet-ingot premium spread slowly narrows, 7 September 2026 (assessment of 28 August 2026). https://www.fastmarkets.com/insights/european-aluminium-billet-ingot-premium-spread-slowly-narrows/
- Eurostat, Comext EU trade since 1988 (DS-045409), CN 7604 29 90 solid profiles of aluminium alloys, April to August 2026, extracted 19 October 2026. https://ec.europa.eu/eurostat/databrowser/product/page/DS-045409
- Norsk Hydro, second quarter report 2026, extrusion ingot premium (EU duty paid), 1,109 dollars a tonne. https://www.hydro.com/globalassets/06-investors/reports-and-presentations/quarterly-reports/2026/q2k9pev/second-quarter-report-2026.pdf
- Purely Energy, UK ETS carbon price, UKA settlement 16 October 2026 (cross-check). https://www.purelyenergy.co.uk/tools/carbon/uk-ets (read 19 October 2026)
- Prime Minister's statement to the House of Commons, 12 October 2026. https://www.gov.uk/government/speeches/pm-statement-to-the-house-of-commons-12-october-2026
- Mayer Brown, "EU adopts CBAM simplification regulation: 10 key amendments", October 2025, summarising Regulation (EU) 2025/2083. https://www.mayerbrown.com/en/insights/publications/2025/10/eu-adopts-cbam-simplification-regulation-10-key-amendments-and-challenges-ahead
- Regulation (EU) 2023/956 (CBAM), consolidated to 20 October 2025. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02023R0956-20251020
