The UK carbon border charge is a tax on your UK buyer, not on you — but your buyer cannot file without your emissions data. Check whether your goods are in scope, whether your buyer crosses the GBP 50,000 registration threshold, and what verified data to send before the first return on May 31, 2028.
Applies in: CA
The United Kingdom's Carbon Border Adjustment Mechanism, CBAM, is not a tax on you. It is a tax on goods imported into the United Kingdom, paid by the UK importer to HM Revenue and Customs through a tax return. Your exposure as a Canadian seller is indirect but real: your buyer cannot complete its return without emissions data that only you and your installation can supply, and if that data never arrives, your goods are priced on default values that take no account of how clean your production actually is.
UK CBAM commences on January 1, 2027. Unlike the European Union's CBAM, there is no reporting-only transitional period and no certificate system: the charge applies from the first day, it is collected through returns, and the first return covers the whole of 2027. This guide is written for a small exporter: one or a few UK buyers, no compliance department, goods in one of the covered sectors. It covers process and paperwork only. It gives no advice on whether a particular shipment is commercially worth making, and it states no CBAM rate, because the rates are set quarterly and any figure quoted here would be stale on arrival. It also carries no European Union figures over: the UK regime differs from the EU regime in the threshold, the filing mechanics, and the sectors covered, and every point below is stated for the UK regime alone.
This guide was grounded on the GOV.UK CBAM policy summary on October 29, 2026. Recheck the GOV.UK CBAM collection page before you act, and recheck it again before January 1, 2027: further guidance is still to be published, and the recheck date for the first compliance cycle is May 31, 2028, when the first return and payment fall due.
UK CBAM places a carbon price on the emissions embodied in imports of specified goods in five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. It does not apply to everything you might ship to the United Kingdom, and it does not apply to services. The first check is therefore a classification check, not an emissions check: find your goods in the annex to the policy summary, which lists the commodity codes within scope, and confirm the goods are among the listed CBAM goods for their sector, using the commodity code your buyer uses for the import.
Do this check per product, not per company. A business that ships aluminium extrusions and also ships finished goods made mostly of other materials may find that only some lines are CBAM goods. Some goods inside the listed sectors are excluded by commodity code: imported scrap products within the aluminium and iron and steel sectors, for example, will not be within scope from January 1, 2027. Glass and ceramics are not in scope at all. A business whose entire catalogue sits outside the five sectors has no UK CBAM work to do under this guide, whatever its buyer says. If the classification is genuinely unclear, ask your buyer which commodity code they will declare and check that code against the annex before you agree to supply emissions data for it.
The single most useful question a small exporter can ask is not "what do you need from me?" but "what is the total value of the CBAM goods you will import this year, from every seller?" The answer decides whether CBAM registration applies to that buyer at all.
A person must register with HMRC for CBAM if they meet or exceed the minimum registration threshold of GBP 50,000. The threshold considers the total value of CBAM goods imported, or expected to be imported, into the United Kingdom, and it is tested two ways. Under the forward-looking test, on any given day the buyer must consider whether the total value of CBAM goods expected to be imported and pass the tax point over the next 30 days will meet or exceed GBP 50,000. Under the backward-looking test, on the first day of each month the buyer looks back over the preceding 12 months. If either test is met, liability to register begins on the day the test was met, or the earlier of the two dates if both are met. For goods imported during 2027, the backward-looking test only looks back to January 1, 2027. The value of a CBAM good is the value used, or that would be used, to calculate any applicable customs duty on its import.
Two consequences follow for a small seller. First, the threshold is per importer, not per shipment and not per seller: your shipment counts toward your buyer's total alongside every other seller's goods. Second, splitting a shipment into smaller consignments does not create a new threshold, and the regime includes legislation to deter artificial separation of business activities and prevent circumvention. Get the buyer's position in writing: their expected CBAM import value, whether they have triggered either test, and the date they triggered it. You cannot work this out from your own order book.
Your buyer, or its tax agent, must complete and submit a CBAM return after the end of each accounting period, from the time the buyer becomes registrable until deregistration. A return is required even for a period with nil liability. The first accounting period is 12 months, from January 1, 2027 to December 31, 2027, with returns and payments due May 31, 2028. From January 1, 2028, accounting periods move to a quarterly cycle, gradually transitioning to a two-month return and payment window.
On the return, the buyer reports each consignment separately, by the 8-digit commodity code in force when the good passed the tax point, the net weight in kilograms at the time of import, the emissions intensity in tonnes of carbon dioxide equivalent per functional unit, any carbon price the goods were subject to in a qualifying scheme, in pounds sterling, the quarter in which each good passed the tax point for the first accounting period, and the country of origin under non-preferential rules of origin. The tax point, in most cases, arises when the good is imported and becomes liable to import duty, or would become liable if legislation did not disapply that duty.
That filing shape is why your data duties start in 2027 even though registration does not open until 2028. The buyer cannot reconstruct net weights and emissions intensities a year later from invoices alone. Agree the data template and the deadlines with the buyer before the first shipment, and keep your own copy of exactly what was sent, with dates.
Your buyer has two ways to report the embodied emissions in your goods: the government's default values, or your actual values. The choice is the buyer's filing choice, but the work behind it is yours, and the commercial consequence lands on your price competitiveness.
Default values are determined by the government. From January 1, 2027, there will be one default value set per CBAM good. They require no data from you and no verification, and they can also be used for precursor goods even where actual data is used for the processes that turn the precursor into the final good. They also give you no credit for a cleaner-than-average installation. Actual values are the emissions of your specific installation, calculated under the UK methodology, and they count only when verified as satisfactory. The installation appoints an appropriate verifier, independent of the installation, accredited by an eligible accreditation body against the international verification standards named in the policy summary, and accredited for the correct scope of activities: a verifier accredited for fertiliser production is not automatically eligible to verify iron and steel.
For a small exporter, the decision rule is practical. If your installation's emissions are close to or above the sector average, verified actual values buy you little, and the verification cost may exceed any benefit; let the buyer file on defaults and spend your effort elsewhere. If your installation runs cleaner than the average — hydro-powered aluminium, efficient steelmaking, low-carbon cement — verified actual values are the mechanism that turns that advantage into a lower charge for your buyer, which is a real selling point in a negotiation. Either way, agree the choice explicitly, in the order paperwork, before production. A buyer that assumed defaults and a seller that assumed actual values will discover the mismatch when the return is due, when neither can fix it cheaply.
Embodied emissions are calculated at the level of the installation where the goods were produced, over a monitoring period of one calendar year. The charge is based on the direct emissions embodied in the goods, within system boundaries that reflect UK Emissions Trading Scheme system boundaries. That sentence carries three practical consequences. First, the unit that matters is the plant, not the company: two plants owned by the same company can have different emissions intensities for the same product. Second, the emissions embodied in relevant precursor goods — a CBAM good used as an input into the production of another CBAM good — must be included when measuring a complex good. Third, the methodology, including how precursor emissions are treated, weighted averages, and joint production processes, is set out in the emissions and verification force of law notice; use the current notice, not a summary of it.
Start with the data you already keep: fuel and energy consumption, production volumes by product type, and the origin and quantity of precursor materials. The calculation runs in steps set out in the policy summary: identify the monitoring period, identify the relevant emissions in that period, convert non-carbon-dioxide gases to carbon dioxide equivalent, add precursor emissions, identify the weight of goods produced, divide to get the emissions intensity, rounded to five decimal places, and multiply by the weight imported. The weight reported on the return is the net weight in kilograms, excluding packing materials and packing containers, at the time the good was imported, and the importer must hold records evidencing how the weight was arrived at. If the correct weight is not provided, HMRC may determine it. Keep the source records behind every figure: the importer must keep CBAM records for six years after the end of the accounting period the goods are attributed to, and your buyer will ask you for the records that support your figures.
For the first year, the importer reporting actual data linked to the date of importation uses the most recently verified emissions intensity available from either the calendar year of import or the preceding calendar year. For goods imported in May 2027, for example, verified 2027 data is used if it exists; if not, verified 2026 data can be used. An installation that starts measuring in mid-2027 will therefore be working with whatever its 2026 monitoring can support, or with defaults, until a verified 2027 figure exists.
Verification is what separates a filing number from a sales claim. To verify the emissions data, the verifier must confirm that the installation operator's data has been determined accurately and in accordance with the Emissions and Verification Regulations 2026 and the emissions and verification force of law notice. Before verification begins, the operator must provide information about the production processes and the monitoring arrangements in place. The verifier then conducts strategic and risk analyses, prepares a verification plan, appoints a team of at least a lead auditor plus auditors and technical experts, and appoints an independent reviewer who is not part of the verification team. The team analyses the data, confirms the correct methodologies were followed, confirms any precursor data and default values used are correct, and conducts a physical site visit at one or more appropriate points during the monitoring period, subject to exceptions set out in the force of law notice.
Book the verifier early. The UK scheme has no equivalent of the EU CBAM Registry for third-country installation operators: there is no central portal where you upload once and every buyer retrieves your data. Sharing the verified data is a direct exchange between you and each buyer, so build one data pack per installation and per product type, and send the same pack to every buyer rather than recalculating per request. Two versions of the same figure, produced months apart, are how inconsistencies enter a return.
This is the part of UK CBAM most often oversold to Canadian exporters, so it gets stated plainly. The importer can claim carbon price relief to reduce its CBAM liability, but only where the embodied emissions were subject to a qualifying carbon pricing scheme and the importer holds a completed carbon pricing verification form from a verification body that meets the requirements, plus the other information needed to calculate the relief. The relief is calculated from the effective carbon price: the emissions subject to each element of the qualifying scheme, multiplied by the applicable price per tonne, divided by the total relevant emissions, adjusted for any monetary support or compensation received in relation to those emissions, and multiplied by the embodied emissions of the good. Relief calculated in an overseas currency must be converted into pounds sterling using the exchange rates published by HMRC for the calendar quarter prior to the import. Total relief claimed cannot exceed the CBAM liability due.
What that means for a Canadian facility is record-keeping, not a rebate. Keep the facility-level proof of the carbon price actually paid under the system that applied to your installation, including any rebates or compensation that reduced what was effectively paid, and the publicly available headline price of the scheme. Do not convert that proof into a sterling figure yourself, and do not quote a buyer a net CBAM cost that assumes relief. The conversion and the qualification assessment are the importer's calculation, supported by the verification form. The honest sentence to put in a quote is: "Carbon price paid in Canada is documented and available to your verifier; no relief is assumed in this price."
The CBAM rate is a single rate per sector. It reflects the effective carbon price in the United Kingdom, set with reference to the UK Emissions Trading Scheme: the average ETS price, calculated as the mean average of all UK ETS auction clearing prices for the relevant quarter, adjusted for the allocation of free allowances to UK producers in that sector, using a sectoral average over a baseline period adjusted annually by a reduction factor to reflect the phase-out of free allowances. Rates are calculated and published by the government at the beginning of each quarter from January 1, 2027, and the rate that applies to a shipment is the rate for the sector that applied when the good was imported.
None of that tells you what your goods will cost your buyer, because the charge depends on the verified or default emissions intensity for your specific goods, multiplied by the sector rate for the quarter of import, less any carbon price relief. What you can settle, before the first shipment, is the allocation: who bears the tax cost, who supplies emissions data and by what date each year, who pays for verification, what happens if verification is delayed or fails, and what happens if the buyer's import value crosses the GBP 50,000 threshold mid-year and the earlier shipments become registrable. Put the data duties in the same document as the price. A purchase order that is silent on CBAM data, signed in November 2026, is how a small exporter ends up doing verification work at rush rates in 2028 for shipments that sailed in 2027. Penalties apply for failure to notify HMRC of liability, failure to submit a return, failure to pay, and errors in returns, and HMRC can compulsorily register a liable person who fails to register — all reasons for your buyer to want the data early, and for you to supply it on time.
For each installation and each product type, send one pack, and re-send it when anything in it changes:
Send the pack once per buyer, keep a copy of exactly what was sent, with dates, and keep the underlying records for at least six years after the end of the accounting period the goods are attributed to, matching the importer's retention duty.
This guide carries no CBAM rate figure, no UK ETS price, and no per-tonne cost estimate for any product. Illustrative example rates and methodology for all five sectors are published on GOV.UK, alongside a worked example, and the policy summary states expressly that the illustrative rate is illustrative only. Any rate printed here would mislead within a quarter. It carries no default value figure: default values are published on GOV.UK and may be amended or updated by HM Treasury, so the buyer must use the current published set. It carries no claim that any Canadian carbon pricing scheme qualifies for relief, and no claim that any jurisdiction is exempt: no international arrangement is currently in place, and no jurisdiction is currently exempt. It carries no statement about glass or ceramics beyond their exclusion from scope at commencement, and no claim about indirect emissions beyond the direct-emissions basis stated in the policy summary. If a page in the Sources list changes any of these points, that page governs and this guide should be read against it.
Your UK buyer pays, as the importer. The person liable for UK CBAM is the importer named on the customs declaration, or the person on whose behalf the declaration is made. The charge is a tax administered by HM Revenue and Customs, reported on a CBAM return and paid by the return deadline, not at the border. You do not register with HMRC and you do not file the return. Your part is the data: without verified embedded-emissions figures from the installation that produced the goods, your buyer must fall back on the government's default values, which may price your shipment higher than your real emissions would. Who bears the tax cost in the end is a term of your sales contract, so settle it in writing before the first shipment, not after the first return.
It does not require that buyer to register, if the buyer's total stays below GBP 50,000. The threshold is a value threshold, not a weight threshold, and it is tested two ways: a forward-looking test over the next 30 days, applied on any day, and a backward-looking test over the preceding 12 months, applied on the first day of each month. Either test met means the buyer must register. For goods imported in 2027, the backward-looking test only looks back to January 1, 2027. The value counted is the customs value used for duty purposes. Ask each buyer for its running total in writing, and keep the answer with the order file, because a buyer that crosses GBP 50,000 partway through the year becomes registrable from the day the test was met, and the 2027 imports then fall into the first return.
No. Registration is the importer's obligation. A person must register with HMRC if they meet or exceed the GBP 50,000 minimum registration threshold, and registration opens on January 1, 2028. Businesses that become liable during 2027 have until January 31, 2028 to register, using a Government Gateway account. Between becoming liable and completing registration, the importer must retain the records needed to register and file. Nothing in the GOV.UK policy summary asks a non-UK seller to register. What your buyer may ask of you is different from registration: the buyer needs your emissions data, your net weights, and evidence for any carbon price relief claim, and the buyer needs those records kept for six years after the end of the accounting period the goods are attributed to. Supply the data; do not try to register on the buyer's behalf.
Use actual values only when you can prove them. The importer may report emissions using default values determined by the government, or actual data about the emissions embodied in the goods. From January 1, 2027 there will be one default value set per CBAM good. Actual data must have been verified as satisfactory by a verifier accredited by an eligible accreditation body, against the international verification standards named in the policy summary, and the verifier must conduct a physical site visit at one or more appropriate points during the monitoring period, subject to exceptions in the force of law notice. If you cannot produce verified data, your buyer files on defaults, and the shipment is priced on the default, not on your plant's real performance. That is the whole commercial point of doing the measurement work: a lower-carbon installation only gets credit for being lower-carbon when the figure is verified. Do not send an unverified spreadsheet and call it actual values.
It may, but do not promise yourself or your buyer a reduction until the claim has been worked through. The importer can claim carbon price relief, which reduces the CBAM liability, if the embodied emissions were subject to a qualifying carbon pricing scheme and the importer holds the necessary verification documents, including a carbon pricing verification form completed by a suitably qualified verification body. A qualifying scheme must be a carbon tax, an emissions trading scheme, or a scheme pricing emissions embodied in imported goods, administered by or on behalf of a tier of government or a supra-national organisation, with publicly available rules, scope, and headline price, and it must impose a cost on the relevant emissions. Compensation connected to the emissions must be accounted for, and relief cannot exceed the liability due. No international arrangement or agreement is currently in place, and no jurisdiction is currently exempt. Keep facility-level proof of whatever carbon price was actually paid under the system that applied to your installation, tell your buyer the proof exists, and let the buyer and its verifier work out what, if anything, can be claimed. Whether a Canadian scheme qualifies is a check against those criteria, not an assumption stated in this guide.
Liability starts with goods imported on or after January 1, 2027. That is the date that matters for record-keeping, because the first accounting period runs from January 1, 2027 to December 31, 2027, and the return and payment for that period are due five months later, on May 31, 2028. Registration opens on January 1, 2028, and businesses liable during 2027 have until January 31, 2028 to register. From January 1, 2028, accounting periods move to a quarterly cycle, with returns due on the last working day of the month after a transition period: the quarter ending March 31, 2028 has a return and payment deadline of July 31, 2028. CBAM rates are calculated and published by the government at the beginning of each quarter from January 1, 2027, and the rate that applies is the rate for the sector that applied when the good was imported. Recheck the GOV.UK CBAM collection page before you act, and again before January 1, 2027: this guide states no rate figure, because the rates published so far are illustrative only.