CBAM Update: July 2026

By Sam Thake, Customs Consultancy Manager, Denholm Good Logistics

CBAM Update: July 2026

HMRC has published further guidance on the UK Carbon Border Adjustment Mechanism (CBAM), giving importers more detail on when registration may be required, which goods are in scope, and what records should be retained. With CBAM obligations becoming increasingly important for businesses importing affected goods, importers should now be reviewing their commodity codes, supplier information, and record-keeping processes to understand how the rules may apply to them.

Key points for importers

• CBAM currently applies to certain goods within the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors.
• Importers should check whether their goods are in scope by reviewing the relevant CN codes.
• The registration threshold is £50,000 of imported CBAM goods, although some goods do not count towards this threshold.
• Detailed records will need to be retained for at least 6 years.
• Carbon Price Relief may be available where a qualifying carbon price has already been paid on the embodied emissions of imported CBAM goods.

Checking whether registration is required:

Which goods are in scope?

Importers can now take practical steps to check whether they need to register for CBAM. This includes checking which goods are in scope, confirming whether they are classed as the importer, understanding when goods do not contribute to the registration threshold, and working out the date they may need to register from.

HMRC has released specific lists of CN codes confirming which goods are in scope of CBAM. These are separated into aluminium, cement, fertiliser, hydrogen, and iron and steel. Importers should review these lists against their commodity codes to confirm whether their goods are affected.

When does the registration threshold apply?

The registration threshold for an importer is set at £50,000 of imported CBAM goods. However, some goods do not contribute to this threshold. This includes CBAM goods that:

• are for private use
• are of UK origin
• are eligible for returned goods relief
• are under temporary admission with full relief from customs duties
• have been processed under a special customs procedure

Special customs procedures

Goods imported under a special procedure, such as temporary admission, inward processing, or customs warehousing, are not in scope at the time of import. If they are later released to free circulation, they will be in scope at that point and will count towards the registration threshold.

For inward processing, the original imported CBAM good can still count towards the threshold if it is processed into a non-CBAM good and released to free circulation.

For outward processing, the increase in value between the exported CBAM good and the re-imported processed good may count towards the threshold.

When must importers register?

Registration for CBAM must be completed when the first of the following applies:

An importer expects to import £50,000 or more of CBAM goods within the next 30 days from 1 January onwards; or

From 1 January onwards, on the first day of each month, an importer should check whether they have imported £50,000 or more of CBAM goods in the previous 12 months.

The earliest date on which an importer becomes liable for CBAM must be used as the registration start date.

Keeping records

Record keeping will be an important part of CBAM compliance. All records must be retained for a minimum of 6 years from the end of the accounting period they relate to. The records must include the following information about each CBAM good:

• 8-digit commodity code and accurate description
• Date passed the tax point (cleared into free circulation)
• Value
• Net weight
• Evidence for any exemptions from CBAM
• Quarter they passed the tax point (cleared into free circulation)
• Proof of origin

Customs documents can be used as records and are likely to be the most practical option, as monthly CDS data holds almost all the information listed above. Individual import entries should also be supported by the documents that evidence the information declared on each entry. Using CDS data as a master record and retaining entry-specific records alongside individual declarations would be a sensible approach.

Where importers wish to use actual emissions data, they will need to keep evidence that the emissions data has been verified. This should be obtained from the supplier and should be in the form of a verification report or summary containing the relevant data. If this evidence cannot be obtained, the importer must use default values instead.

The weight of goods can be entered up to 6 decimal places. Where the weight is greater than 1kg, it may be rounded to the nearest kg: 0.001 to 0.499 can be rounded down, and 0.5 to 0.999 can be rounded up. If the weight is less than 1kg, it should be entered as 0 followed by decimals up to 6 places.

As part of registration, importers will need to provide estimates of the net weight of CBAM goods they expect to import over the next 12 months. This estimate must be provided by sector, and evidence showing how the weight has been estimated should be retained.

Carbon Price Relief records

Importers wishing to claim Carbon Price Relief should also keep records of:

• The qualifying carbon pricing scheme the CBAM goods were subject to
• How the goods qualify for the relief
• Which elements of the scheme were used to decide the price
• How the CBAM liability has been adjusted down

Repayment claims

Repayment claims can be made where return errors have led to an overpayment. HMRC will accept reclaims up to 3 years, and records for the reclaim will need to be retained for at least 6 years. Details required include:

• Reason for the claim
• Date error was found
• Accounting period the claim relates to
• Full details of the CBAM good
• Date the CBAM liability was paid

HMRC may refuse a claim if the importer has passed the economic burden of the amount to another person and the payment would unjustly enrich the claimant. The claim will not be refused if the claimant agrees to reimburse the customer and the conditions of HMRC’s reimbursement scheme are met. When reimbursement is made, the claimant must keep records of the details of each person they will reimburse and the specifics of the reimbursement payment.

Records for exempt goods

Where goods are exempt, records must still be kept to prove why the exemption applies. This includes goods imported for private use, goods of UK origin, goods eligible for Returned Goods Relief (RGR), and certain special procedure imports.

• Private use – proof of ownership, how goods were used, evidence of goods being used
• UK origin – invoices, production records, accounting details, supplier declarations, ‘importers knowledge’ evidence
• Returned Goods Relief (RGR) – proof of original UK export, evidence goods are in the same state, re-import declarations, serial numbers/packing lists
• Temporary admission – evidence that goods are eligible for relief, import declarations, and proof that goods are meeting TA conditions

Carbon Price Relief (CPR)

Carbon Price Relief (CPR) can be claimed for imported CBAM goods where a carbon price has already been paid on the embodied emissions in those goods. To qualify, the goods must have been subject to a qualifying carbon pricing scheme, and the relevant installation must provide a completed carbon pricing verification form. This form must be completed by an independent verifier who meets the required ISO standards.

In summary, to claim CPR, importers must:

• Check if goods have been subject to a scheme
• Get a carbon pricing verification form
• Obtain information to work out the CPR
• Work out the CPR

Check whether goods have been subject to a qualifying carbon pricing scheme

For goods to qualify for CPR, they must have been subject to a qualifying carbon pricing scheme that meets all of the following conditions:

• It must be operated by a government (national, regional, state, or provincial level) or a supranational body such as the European Union.
• The government or organisation running the scheme must control how any revenue generated is used.
• Participation must be legally required for installations that produce or process CBAM goods. This can include schemes where participation only becomes mandatory once emissions exceed a certain threshold. Installations below the threshold may still qualify if they voluntarily join an eligible scheme.
• The scheme’s rules, coverage and headline carbon price must be publicly available.
• Participants must incur a cost for their emissions, either directly or through another approved mechanism within the scheme.

The scheme must price emissions in one of two ways:

1. Directly by charging for each tonne of carbon dioxide equivalent (tCO₂e) emitted; or
2. Indirectly by pricing emissions through the fossil fuels used during production.

Indirect pricing must use emission factors taken from, or developed using the methodology of, one of the following websites:

• Intergovernmental Panel on Climate Change website
• International Energy Agency website
• United Nations Framework Convention on Climate Change website

The following do not qualify as carbon pricing schemes for the purposes of Carbon Price Relief:

• Carbon charges that are not a carbon tax, Emissions Trading Scheme (ETS), or a scheme that prices the embedded emissions of imported goods.
• Measures that do not charge for emissions generated during the production process.
• Schemes not administered by a government, supranational organisation, or their authorised representatives.
• Voluntary carbon pricing schemes, even if government-operated and imposing a cost on emissions.
• Fuel duties, as these are charged per unit of fuel (litre, kilogram, etc.) rather than based on the amount of emissions produced.

Obtain a carbon pricing verification form

Once it has been established that the imported CBAM good has been subject to a qualifying scheme, the importer must obtain a carbon pricing verification form from the installation. The form must be completed by an independent verifier who meets the relevant standards: ISO/IEC 17029:2019, ISO 14064-3:2019, ISO 14065:2020, and ISO 14066:2023. The verifier must be:

• accredited by an accreditation body which is a full member of the Global Accreditation Cooperation Incorporated
• a signatory to the Global Accreditation Cooperation Multilateral Recognition Agreement
• independent of the installation, importer and jurisdiction of the qualifying carbon pricing scheme

The form must be complete and include the installation’s total annual emissions (tCO₂e), broken down by each element of the qualifying carbon pricing scheme. Where emissions are priced indirectly, they must be converted to tCO₂e using the scheme’s approved emissions factors. You can use emissions data from either one or two calendar years before the import year.

A qualifying carbon pricing scheme may include several elements that affect the carbon cost an installation pays, including the headline carbon price, free allowances, higher graduated rates for emissions above certain thresholds, credits for greenhouse gas removals, and emissions thresholds where some emissions may be charged at zero. The scheme may also provide compensation, such as rebates or refunds linked to emissions, provided the details are publicly available and administered by the relevant government or authority.

Information needed to work out CPR

To work out Carbon Price Relief, an importer will need the verification form and publicly available information published by the scheme administrator. This may include the headline carbon price, graduated carbon prices, compensation received or due, and greenhouse gas removal prices.

The verification form will confirm the name of the scheme. The importer will then need to find the headline carbon price, graduated carbon prices, and greenhouse gas removal prices, and calculate the average for each for the calendar quarter immediately before the import date. For example, if the CBAM goods were imported in March 2030, the average price would be calculated using data from October to December 2029.

Working out Carbon Price Relief

Once an importer has confirmed that their goods have been subject to a qualifying scheme, obtained a verification form, and collected the publicly available information published by the scheme administrator, they can calculate their CPR.

Calculation steps

1. Find the annual tCO₂e on the form.
2. Identify the tCO₂e for each element of the scheme, such as the headline carbon price, greenhouse gas removals, and graduated carbon price.
3. Multiply the tCO₂e for each element by the relevant published carbon price, then add the results together to calculate the total carbon cost paid by the installation.
4. Divide the total figure from step 3 by the total installation emissions from step 1 to find the effective carbon price.
5. If applicable, and the form confirms compensation is due, divide the compensation by the total installation emissions from step 1, then subtract this from the figure from step 4. This will give the effective carbon price.

Example

The example below relates to an imported CBAM good in October 2030. The emissions recorded on the form are for 2028, and the scheme prices for each element are from the previous calendar quarter, July to September 2030. Values are expressed in dollars and need to be converted to GBP.

Step 1

The carbon pricing form shows 100,000 tCO₂e.

Step 2

The 100,000 tCO₂e were subject to the following elements of the scheme:

• Headline carbon price – 60,000 tCO₂e
• Free allowances – 20,000 tCO₂e
• Greenhouse gas removals – 20,000 tCO₂e

Step 3

• Headline carbon price – $15.50 per tCO₂e × 60,000 tCO₂e = $930,000
• Greenhouse gas removals – $45 per tCO₂e × 20,000 tCO₂e = $900,000
• Total = $1,830,000

Step 4

$1,830,000 ÷ 100,000 tCO₂e = $18.30 per tCO₂e

Step 5

The installation was due $800,000 compensation for 2028.

$800,000 ÷ 100,000 tCO₂e = $8 per tCO₂e

$18.30 per tCO₂e – $8 per tCO₂e = $10.30 per tCO₂e

In this example, $10.30 per tCO₂e is the effective carbon price paid on the imported CBAM good. This can then be used to work out the CPR for the imported CBAM goods.

Calculating the CPR

To calculate CPR, an importer will need to multiply the effective carbon price by the embodied emissions (tCO₂e) of the CBAM goods that are subject to that carbon pricing scheme. This should be done for each CBAM good that qualifies for relief, including goods used to manufacture or process another CBAM good. Carbon Price Relief must be converted to GBP using published HMRC exchange rates for the calendar quarter before import and rounded down to two decimal places. The total relief claimed cannot exceed the CBAM liability due.

What importers should do now

Importers should review their commodity codes, assess whether their imports could exceed the CBAM registration threshold, and consider whether existing customs records will provide the evidence needed for compliance. Where Carbon Price Relief may be available, importers should also speak to suppliers early to understand whether verified emissions and carbon pricing information can be obtained.

If you are unsure whether your goods fall within CBAM, whether registration may be required, or what evidence should be retained, our customs consultancy team can help review your position and advise on the practical steps needed to prepare.

Contact our CBAM team today.