Could your imports be affected by CBAM? What SMEs need to know before January 2027

CBAM is a new tax on certain goods imported into the UK. It is designed to account for emissions generated during the production of some carbon-intensive goods manufactured outside the UK. 

The aim is to ensure imported products face a comparable carbon cost to equivalent goods produced under the UK's carbon-pricing arrangements. 

For many businesses, the biggest impact may not be the tax itself but the need to collect, verify and retain information about imported products and their associated emissions. 

You may wish to pay particular attention if you:

• Import goods directly from overseas
• Buy products from manufacturers outside the UK
• Source materials used in manufacturing or construction
• Import steel, aluminium or other potentially affected products
• Import relevant goods worth £50,000 or more over a 12-month period
• Act as the importer rather than using a third party

Even if your business is not directly responsible for CBAM, you may find suppliers or customers begin asking for emissions-related information as businesses across supply chains prepare for the new requirements. 

Example: An engineering manufacturer

An engineering business imports steel components from an overseas supplier for use in finished products sold in the UK.

It may need to:

• Check whether imported goods fall within CBAM scope
• Obtain emissions information from suppliers
• Review record-keeping processes
• Understand whether any overseas carbon pricing has already been paid

Example: A construction materials supplier

A supplier imports aluminium products for resale within the UK construction sector.
It may wish to:

• Review commodity codes
• Understand what emissions information suppliers can provide
• Consider how relevant information will be recorded and retained
• Assess any future reporting obligations

Example: A manufacturing business

A manufacturer imports materials from several countries and suppliers.

Even where products appear similar, the emissions information and carbon-pricing arrangements associated with those imports could vary significantly between suppliers.

The business may therefore need to build a clear process for gathering and managing data across its supply chain. 

CBAM currently applies to goods within the following sectors:

• Aluminium
• Cement
• Fertiliser
• Hydrogen
• Iron and steel 

The detailed scope is determined using commodity codes, so you should not rely solely on product descriptions when assessing whether imports are affected. 

1 January 2027: CBAM comes into effect. 

Throughout 2027: Importers should keep the records needed to support future CBAM reporting requirements. 

By 1 January 2028: CBAM registration is expected to open. Importers will need to estimate the weight of CBAM goods they expect to import over the following 12 months, including estimates by sector. 

Embodied emissions – The greenhouse gas emissions associated with producing a product before it reaches the UK. This may include emissions generated during manufacturing and processing.

Carbon Price Relief – A reduction in CBAM liability that may be available where imported goods have already been subject to a qualifying overseas carbon-pricing scheme. 

Qualifying carbon-pricing scheme – An overseas government-run carbon-pricing mechanism that meets HMRC's criteria and may allow businesses to claim Carbon Price Relief. 

Carbon Pricing Verification Form – A document used to evidence emissions and carbon-pricing information when claiming Carbon Price Relief. It must be completed by an appropriately accredited independent verifier. 

In some circumstances, businesses may be able to reduce their CBAM liability if the emissions linked to imported goods have already been subject to a qualifying carbon-pricing scheme overseas.

To claim relief, importers may need:

• Evidence that the overseas scheme qualifies
• A completed Carbon Pricing Verification Form
• Supporting calculations and records
• Information published by the relevant scheme administrator

HMRC has also published a provisional list of qualifying carbon-pricing schemes to help businesses prepare. 

Many businesses are already gathering information on suppliers, sourcing arrangements, sustainability performance and imported goods.

If you already have good visibility of:

• What you import
• Where it comes from
• Which suppliers provide it
• Relevant customs documentation
• Product weights and values

you may find you're starting from a stronger position than you think. 

However, it is still worth reviewing whether you have access to the emissions and carbon-pricing information that CBAM may require. 

Preparing early could make compliance considerably easier once the regime comes into force.

You may wish to:

• Identify imported goods that could fall within CBAM scope.
• Check the commodity codes used for imported products.
• Speak with suppliers about emissions information.
• Understand whether suppliers can provide verified emissions data.
• Review internal record-keeping processes.
• Familiarise yourself with Carbon Price Relief requirements.
• Monitor future HMRC guidance and updates. 

One of the strongest themes emerging from HMRC guidance is the importance of supplier information. 

Importers may need:

• Emissions data
• Verification documentation
• Information about overseas carbon-pricing schemes
• Details relating to production facilities and processes

Businesses that start these conversations early may have more time to address any data gaps before reporting obligations begin.

Some challenges you may watch out for and avoid include:

• Assuming CBAM only affects large importers

• Waiting until 2027 to contact suppliers

• Relying solely on product descriptions rather than commodity codes

• Assuming suppliers already collect all required emissions information

• Overlooking record-keeping requirements

• Treating CBAM as purely a tax issue rather than a data-management challenge