1 January 2027 UK CBAM levy on imports of carbon intensive goods
Following a summer consultation, the UK government confirmed the introduction of carbon border adjustment mechanism (CBAM) from January 2027. CBAM will be a levy on certain carbon-heavy goods being imported into the country. One change as a result of the consultation is an increase in the annual imported products threshold to £50,000 from £10,000. It also removed ceramics and glass from the list of products subject to the levy.
The EU legislated its own EU CBAM as part of the European Green Deal, it takes effect in 2026, with reporting starting in 2023. The UK model follows most of the design features of the EU version.
Levy on carbon-heavy goods imports from 2027
The UK is to introduce CBAM to deter UK businesses buying-up goods from other countries which have loose green environmental restrictions on their own importers. It also helps level-up the playing field for UK businesses which are subject to the Emissions Trading Scheme.
The UK’s CBAM will impose carbon taxes on imports for five sectors:
- aluminium
- cement
- fertiliser
- hydrogen
- iron & steel
Ceramics and glass, included in first draft, have been withdrawn.
The rate payable on CBAM goods will be set by the government. The government proposes that there will be five rates of tax – one for each above sector. There will be an adjustment to offset any carbon-related taxes or levies from the source country of the goods. The UK CBAM rate will be set on a quarterly basis in line with the quarterly UK CBAM filings, which will be due from 2028 onward.
