Following the Budget, the Government’s Response to consultation on the ‘introduction of a UK carbon border adjustment mechanism (CBAM)’ was published.
You can access the Government’s Response using this link: Government Response.
The Response confirms that:
- a UK CBAM will be introduced on 1 January 2027. It will place a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors. It is designed to ensure that UK decarbonisation efforts lead to a true reduction in global emissions, rather than simply displacing carbon emissions overseas
- products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027, as previously proposed, to allow government and industry time to address feasibility concerns raised throughout the consultation process. The government will continue to work with industry to address these concerns before considering their potential inclusion at a later date
- the value of the minimum registration threshold will be increased from £10,000 to £50,000 so only businesses importing £50,000 or more of CBAM goods over a 12-month period will need to comply with the UK CBAM.
HMRC and HM Treasury will continue to engage with key stakeholders that represent the sectors and industries most affected by the UK CBAM through the establishment of a CBAM industry working group. The group will be set up in the near future.
As well as engaging with UK industry, the government will also introduce a UK CBAM international group to engage with other governments whose exporters have a keen interest in the functioning of the UK CBAM.
The UK CBAM will require both primary and secondary legislation. HMRC intend to publish all the legislation in draft ahead of introducing it before Parliament. This will allow interested stakeholders to review the legislation and ensure it meets the policy intent.
HMRC will also develop a comprehensive communications package and detailed guidance, which the government recognises is essential for liable persons to comply with their obligations as well as for overseas operators and verifiers to support the liable person in meeting these new requirements.
As work on the implementation of the tax proceeds, the government will continue to keep all areas of the UK CBAM design and implementation under review and would welcome continued engagement from all interested stakeholders.
As a respondent to the consultation, CAB will remain engaged with HMRC and HMT on this important topic.
