United Kingdom · Administrative guidance
UK publishes illustrative CBAM rates, not final 2027 charges
On 16 October 2026, HM Revenue & Customs published illustrative UK Carbon Border Adjustment Mechanism rates and a worked example. The figures explain the calculation method; they are neither final 2027 rates nor forecasts.
- Official document:
- HMRC illustrative CBAM rates and worked example, 16 October 2026; Finance Act 2026, sections 149 and 158, Schedule 16; S.I. 2026/809, regulations 3–4
- Development date:
- 2026-10-16
A price on emissions, not import value
Section 149 of the Finance Act 2026 calculates the charge by multiplying the relevant sectoral domestic price by tonnes of carbon-dioxide-equivalent emissions embodied in the goods. The price depends on sector and liability quarter. Schedule 16 identifies covered commodity codes and exceptions across aluminium, cement, fertilisers, hydrogen, and iron and steel; not every product in those industries is covered.[3][4]
Illustrations must stay provisional
HMRC's illustrative prices per tonne of carbon-dioxide-equivalent emissions are £9.69 for iron and steel, £9.79 for aluminium, £8.78 for cement, £1.45 for fertiliser and £9.24 for hydrogen. They use recent data that can change before implementation and do not themselves create tax liability.[1]
The worked example reports an illustrative cement rate of £8.78 per tonne of emissions. It shows inputs of £58.15, 87.1% and 97.5%, but warns that presentational rounding can prevent displayed numbers reconciling exactly. The example demonstrates the free-allocation adjustment, not a final liability calculation. Its rate is not a charge per tonne of cement.[1][3]
Existing law supplies the method
Regulation 3 of the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026, S.I. 2026/809, uses mean auction-clearing prices from the preceding quarter, or the most recent auction quarter if none were sold. Regulation 4 links the free-allocation adjustment to the corresponding UK ETS factor.[5][6]
Section 158 applies CBAM to goods imported from 1 January 2027. HMRC says the first operative quarterly rates will be published before year-end; subsequent rates depend on sector and import quarter. Our practical reading is that multinational importers should retain scenario assumptions separately from final liability calculations and confirm the relevant commodity code before applying a sector price.[1][2][4][7]
Official sources
- [1] Carbon Border Adjustment Mechanism (CBAM) — Illustrative CBAM rates (and worked example)
HM Revenue & Customs · Document date: 2026-10-16
Full substantive HTML75–161 read, including express illustrative/notforecasts/noliability caveats81–96; five-sectorTable1 99–101; cement workedexample103–149 and rounding149. Figures are not activated rates.
- [2] Rates for the Carbon Border Adjustment Mechanism (CBAM)
HM Revenue & Customs · Document date: 2026-10-16
Full substantive73–103 read; sector/importquarter87–93;quarterlypublication96–101. This guidance is not a published first-quarter2027rate table.
- [3] Finance Act 2026, section 149: Rate
UK Parliament / The National Archives · Document date: 2026-03-18
Full current-linked section149(1)–(7), Steps1–2 and definitions read through exact ordinary200HTML after webunsupportedXHTML. Site says no knownoutstandingeffects for section149; not an exhaustivewholeActcertification. Formula is sectoralprice×embodiedemissions, not goodsweight.
- [4] Finance Act 2026, Schedule 16: CBAM Goods
UK Parliament / The National Archives · Document date: 2026-03-18
Full current-linked paragraphs1–2 and complete five-sector commodity-code table/exceptions read via exact ordinary200HTML; site says no knownoutstandingeffects. No native calculator or exhaustivecommoditycoverage implementation claimed.
- [5] S.I. 2026/809, regulation 3: Calculation of the average ETS price
UK Treasury / HM Revenue & Customs · Document date: 2026-07-13
Full original regulation3(a)–(b) read via exact ordinary200HTML; made13July/laid14July/commencement1January2027 verified from original instrument contents/introduction. Meanauctionprice/lastactivequarter fallback only.
- [6] S.I. 2026/809, regulation 4: Adjustment relating to free allowances
UK Treasury / HM Revenue & Customs · Document date: 2026-07-13
Full original regulation4(1)–(2) and footnotes read via exact ordinary200HTML, crossrefEU2019/331article16(14) asamendedSI2026/278; linkedSI278article19fullordinary200bodyalso read in researchledger, including2027factor0.975 and conditional futurevariation. ArticledoesnotcertifyeveryUKETSsubsequentamendment.
- [7] Finance Act 2026: section 158 commencement
UK Parliament / The National Archives · Document date: 2026-03-18
Original enacted560-pagePDF:contents/assent18March2026 and selectedsection158(1)–(3) physicalpp185–186/printed169–170 read, importsfrom1January2027. Section149selectedphysical179–180also read. Notfull560-pageActreview; attemptedpage179screenshot returned429, no visualread claimed.