HMRC Publishes Guidance on Quarterly UK CBAM Rates and Application Rules

HM Revenue & Customs (HMRC) has published new operational guidance explaining how the specific rates for the UK Carbon Border Adjustment Mechanism (CBAM) will be applied to imported commodities.

The CBAM rate applies directly to the embodied emissions contained within CBAM goods imported into the UK. HMRC confirmed there will be different rates for each of the covered sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel.

Crucially, these rates are not static; they will change on a quarterly basis to reflect the effective carbon price in the UK, which is determined by the UK Emissions Trading Scheme (UK ETS).

To calculate their liabilities accurately, importers must check which specific rate applies based on two factors:

• The sector the good belongs to, determined by cross-referencing the relevant commodity code.

• The quarter in which the good was imported into the UK.

For example, if an importer brings steel bars into the country in February 2028, the applicable CBAM rate is the specific iron and steel rate set for the period of 1 January to 31 March 2028.

HMRC has committed to publishing the official CBAM rates by the beginning of each quarter, starting from 1 January 2027. The quarterly publication schedule is set as follows:

• 1 January to 31 March — first quarter.

• 1 April to 30 June — second quarter.

• 1 July to 30 September — third quarter.

• 1 October to 31 December — fourth quarter.