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UK Carbon Border Adjustment Mechanism consultation

Treasury seeks views on CBAM levy on imports of carbon intensive goods 2027

On 21 March 2024, the UK Treasury and HMRC have issued a consultation paper on the proposed UK Carbon Border Adjustment Mechanism (CBAM), a levy on certain carbon-heavy goods being imported into the country.  It is proposed that that the UK CBAM will be introduced on 1 January 2027.

The EU legislated its own EU CBAM as part of the European Green Deal, it takes effect in 2026, with reporting starting in 2023. The UK model follows most of the design features of the EU version.

Levy on carbon-heavy goods imports from 2027

The UK is to introduce CBAM to deter UK businesses buying-up goods from other countries which have loose green environmental restrictions on their own importers. It also helps level-up the playing field for UK businesses which are subject to the Emissions Trading Scheme.

The UK’s CBAM will impose carbon taxes on imports for seven sectors:

  1. aluminium
  2. cement
  3. ceramics
  4. fertiliser
  5. glass
  6. hydrogen
  7. iron & steel

The rate payable on CBAM goods will be set by the government. The government proposes that there will be seven rates of tax – one for each above sector. There will be an adjustment to offset any carbon-related taxes or levies from the source country of the goods.


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