The Road to a UK CBAM – Various new developments just announced including proposed new UK CBAM implementing legislation and public consultation

On 10 February 2026, the UK Government published various new updates on the forthcoming UK Carbon Border Adjustment (“CBAM”). The UK CBAM will be introduced on 1 January 2027 and affects goods imported into the UK from the aluminium, cement, fertilisers, hydrogen, iron and steel sectors.

The main new development is proposed (technical) UK CBAM secondary implementing legislation, with a related public consultation and online information sessions. These proposals are important for those who will be subject to the new UK CBAM rules next year, such as UK importers of affected goods and downstream UK producers which use those goods in their supply chains. These proposals include legislative requirements associated with the administration of the CBAM tax including registration requirements, weight of CBAM goods, record keeping, and tax returns.

While the previous results of HMRC’s consultation and changes to the proposed primary UK CBAM legislation were already published in December 2025, this update also includes a helpful and practical step-by-step Policy Summary of both UK CBAM primary legislation and the newly proposed tranche of secondary legislation.

The public consultation on the proposed implementing legislation is open until 24 March 2026, and the online information sessions are being held online on 3 and 5 March 2026 (and for those interested, additional information sessions are also offered on a deeper dive on Carbon Price Relief). Further draft secondary legislation is planned to be published in Spring 2026 also for consultation, and the government is intending to finalise the secondary UK CBAM legislation later in 2026.

Further information highlighting the key elements of all the UK CBAM new updates and proposals, and details of how to respond to the public consultation and/or join the information sessions, can be accessed in our Law Now below.

UK CBAM – where have we got to?

On 30 October 2024, the UK government confirmed that the UK’s Carbon Border Adjustment Mechanism (“CBAM”) will take effect from 1 January 2027. Primary proposed legislation on CBAM followed in the Finance Bill 2025 to 2026. This has been previously discussed in our earlier Law Now’s including here and here.

The UK’s CBAM regime places a carbon price on goods imported to the UK (including Northern Ireland) from sectors that are at risk of carbon leakage. The carbon price is designed to ensure that imported, carbon-intensive goods face a carbon price equivalent to that paid by UK producers, and is intended to prevent emissions offshoring (i.e. moving production outside the UK to avoid internal UK carbon tariffs), and support domestic decarbonisation. UK CBAM applies to specified goods imported into the UK from the aluminium, cement, fertilisers, hydrogen, iron and steel sectors.

The new UK CBAM is important for UK importers of affected goods, downstream UK producers which use those goods in their supply chains, and overseas operators involved in processing or manufacturing the affected goods.

The new Policy Summary – a practical guide to the UK CBAM process

As helpfully summarised in the new Policy Summary, only specific CBAM goods which are imported into the UK are affected - these are identified by the commodity codes listed in the Annex (including a small number of goods which are excluded).

Information is also set out in the Policy Summary on a variety of key practical points for affected importers and others, from both the primary and proposed secondary legislation, including:

• What to do when CBAM goods are imported, including: the relevant taxable point, goods processed under special customs procedures (including free zones, and authorised use procedures), goods exported to be processed outside of the UK (and where CBAM applies on re-entry), the importer as the relevant person liable for CBAM, and various potential exemptions;
• How to calculate CBAM liability, including how to: calculate the basic liability, use actual emissions data vs. default emissions values, calculate the weight of a CBAM good (which provides the basis for calculating the embodied emissions of an imported good), identify the correct CBAM rate which applies per sector, calculate and claim the relevant carbon price relief (“CPR”) (which reduces CBAM liability where the goods are subject to a qualifying carbon pricing scheme), apply the relevant currency conversion for CPR, and apply any relevant international agreements and potential exemptions with a linked Emissions Trading System (“ETS”);
• The basic CBAM administrative steps, including: registration (where a person must register if they exceed or are expected to exceed the minimum import threshold of £50,000 in value, based on the CBAM liability tests, on or after 1 January 2027), and deregistration (where the relevant person is not liable in the prior 12 months);
• Further CBAM administrative requirements to submit a tax return for CBAM, including explanations on the relevant: accounting periods, information to be included on a return, payment methods and returns/repayments;
• Record keeping requirements for 6 years by CBAM liable persons, including: goods imported which need the applicable commodity code, date of import, value, weight, etc, information provided for the registration process, support for any CPR claim made, and data on emissions embodied where actual emissions data has been used to determine CBAM liability;
• Compliance and penalties: which HMRC will apply in terms of support to enable businesses to meet the new CBAM requirements, and the use of powers and penalties to enforce CBAM compliance where appropriate; and
• CBAM scope: as explained above, an Annex setting out all commodity codes which fall within the scope of the UK CBAM (including a small number of specific exclusions).

The new UK CBAM secondary legislation proposals in detail

As explained, the proposed (technical) UK CBAM secondary implementing legislation, is important for those who will be subject to the new UK CBAM rules, such as UK importers of affected goods and downstream UK producers which use those goods in their supply chains. These proposals take the form of draft regulations and include requirements associated with the administration of tax including registration requirements, weight of CBAM goods, record keeping, and tax returns.

The relevant proposed draft regulations include the following:

1. The Carbon Border Adjustment Mechanism (Administrative Provisions) Regulations 2026 (Draft).

This set outs proposed rules on the information needed to register and submit CBAM returns, reimbursement arrangements, weight and record keeping requirements. It includes:

• The list of information to be provided on registration (i.e. the person’s contact details, address, whether the business is carried on by an individual or a company and its form, the person’s Economic Operator Registration and Identification (EORI) number, VAT number, value of CBAM goods, etc.) and the obligation for registered persons to keep records of such information (without a specific duration);
• Interpretation of ‘the place of origin of the good’ (to be determined within the meaning of the Taxation (Cross-border Trade) Act 2018), information to be included in a return (the 8 digit commodity code, weight of the CBAM good, the level of a default value if one is used to determine the emissions embodied in the CBAM good, the amount of carbon price relief, the place of origin of the good, etc.) and the obligation of record keeping for returns (records must evidence the place of origin of the CBAM good); and
• It provides further definitions and clarifications for reimbursement arrangements (including a requirement for claimants to keep records for 6 years of contact details, the total amount reimbursed to each relevant person, and amount of interest and date of reimbursement) and weight of CBAM goods (explaining that the weight of a CBAM good is without packaging materials and packing containers, at the time it is imported into the UK, and expressed in kilogrammes), including on record keeping (the person importing a CBAM good must keep a record of its weight and any related evidence, without a specific duration).

2. The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (Draft).

This relates to the proposed calculation of the CBAM rate, principles for claiming, verifying and calculating CPR, currency conversion and record keeping requirements. This includes:

• Relevant information on calculation of the CBAM rate including calculation of the average ETS price and adjustments to be applied in relation to free allowances;
• Relevant conditions for claiming CPR which will reduce the amount of CBAM charged. For a CPR claim, the good must have been manufactured or processed by an installation participating in a qualifying carbon pricing scheme as defined in the regulations. The CBAM goods must also meet the requirements relating to verification as also set out in the regulations (including the amount of relevant emissions produced by the installation from which the good was produced, number of relevant emissions subject to the CPR, relevant emissions subject to free allowances, etc.); and
• Information on how to calculate CPR. The proposed regulations lay out a step by step calculation method (including the identification of the amount in tonnes of carbon dioxide, equivalent of all relevant emissions produced in a calendar year by the installation, of which how many are subject to an element of a CPS, the applicable price per tonne of carbon dioxide equivalent for those emissions, etc.).

3. The Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026 (Draft).

This does not contain substantive provisions, and deals with modifications to dates relevant to registration, payment and accounting periods, and related penalties.

4. The Carbon Border Adjustment Mechanism Consolidated Tertiary (Draft)

This compiles notices containing technical factors/details relating both to the primary legislation and secondary draft regulations and gives them the force of law. This includes details relevant to the primary CBAM legislation such as electronic registration and deregistration and changes of information, payment options, access through the Government Gateway account, and repayments. For the proposed secondary legislation, it includes details for emissions factors, verification accreditation and carbon pricing verification forms, inputs on calculation of the effective carbon price and exchange rates, and identifies official sources that are approved for these purposes.

Public consultation on proposed UK CBAM secondary legislation and information sessions

A public consultation is being held on the new UK CBAM secondary legislation proposals, which closes on 24 March 2026. If you are affected by the proposed legislation and would like to have your say, any responses to the consultation should be sent to cbampolicyteam@hmrc.gov.uk, with the subject line ‘CBAM technical consultation response’.

Official information sessions are also being offered to interested stakeholders on the new proposals, including sessions on (i) the Carbon Border Adjustment Mechanism (CBAM): Draft secondary legislation overview, and (ii) Carbon Border Adjustment Mechanism (CBAM): Draft secondary legislation overview – Carbon Price Relief (CPR) deep dive. These two sessions will take place on 3 March and on 5 March 2026, and you can register through the following links: Session (i) 03/03 9am,  Session (i) 03/03 3pm, Session (ii) 05/03 9am, and Session (ii) 05/03 3pm.

What’s next?

A second set of draft secondary CBAM legislation will be published in Spring 2026, and a further technical consultation will be held at the time. The responses to both sets of consultations will be considered by Government, and the final secondary legislation will be confirmed later in 2026, prior to the UK CBAM taking effect from 1 January 2027.

For further information on the UK CBAM proposals, or assistance in responding to the consultations or interpreting how the rules may apply, please don’t hesitate to get in touch with CMS’ dedicated CBAM team.