UK CBAM Default Values Published: What Importers Need to Know Before 2027
Will Marshall
Founder
The UK Carbon Border Adjustment Mechanism (UK CBAM) starts in just over ten weeks, and the government has now published one of the last missing pieces. On 16 October 2026, HMRC released the default emissions values that importers can use when verified data from overseas suppliers is unavailable. For UK SMEs that import steel, aluminium or other carbon-intensive goods, these figures turn the scheme into a cost that can be calculated. This article explains what has been published, who is affected, and the practical steps businesses can take before 1 January 2027.
What Is the UK CBAM?
The UK CBAM is a tax on the carbon emissions embedded in certain imported goods. It targets "carbon leakage", which is the risk that production moves to countries with weaker climate policies. That would undercut UK manufacturers, who already pay a carbon price through the UK Emissions Trading Scheme (UK ETS).
From 1 January 2027, the scheme covers five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. Goods are identified by commodity code, so the scope goes well beyond raw materials. It includes products such as steel screws, bolts and nuts, and certain fabricated articles.
Liability falls on the importer named on the customs declaration, not on the broker or freight forwarder. A business becomes liable once it imports £50,000 or more of CBAM goods over a rolling 12-month period, or expects to within the next 30 days, according to HMRC guidance.
The threshold tests and registration rules are covered in more detail in UK CBAM Arrives in January 2027: What the £50,000 Threshold Means for Small Importers.
What the Default Values Mean
The UK CBAM charge is the embedded emissions of an imported good multiplied by a quarterly CBAM rate. HM Treasury sets that rate based on the UK ETS auction price. Any carbon price already paid overseas under a qualifying scheme can then be deducted.
Importers should ideally report actual emissions data from the overseas installation, checked by an accredited verifier. Where that data is not available, they can use the government's default values instead. The draft notice published on 16 October sets these values as trade-weighted averages based on EU data. It adds a 10% markup in every sector except fertiliser.
The markup is deliberate. Default values are meant as a fallback, not the easy option, and the government wants importers to move towards reporting actual emissions. The current values apply until the end of 2028. From 2029, the UK will switch to country-specific default values.
Who Is Affected
The UK CBAM reaches further than its five named sectors suggest. Businesses are affected in different ways depending on where they sit in the supply chain:
- Direct importers: SMEs that bring covered goods into the UK above the £50,000 threshold will need to register, file returns and pay. Those liable during 2027 must register by 31 January 2028, and the first annual return and payment is due on 31 May 2028.
- Businesses buying from UK distributors: Firms that buy steel or aluminium from a UK wholesaler will not file returns themselves. They are likely to see the cost passed on in prices.
- Exporters to the EU: The EU's own CBAM entered its financial phase on 1 January 2026, and the UK is not exempt. UK exporters of covered goods should expect EU customers to ask for emissions data.
- UK manufacturers: Domestic producers already paying the UK ETS price should face a more level playing field against imports.
The trade at stake is substantial. According to Eurostat figures compiled by CBAM Guide, the EU imported €7.28 billion of CBAM-covered goods from the UK in 2025. That makes the UK the third-largest source by value.
Benefits and Challenges for SMEs
The UK CBAM brings some clear advantages. It protects UK manufacturers who have invested in decarbonisation from being undercut by higher-emission imports. The £50,000 threshold also keeps many micro-businesses out of scope entirely.
The scheme also starts with a narrower calculation. Indirect emissions, from the electricity used to make imported goods, are excluded, and the government has said they will not be added before 2029 at the earliest.
The challenges are significant, however. The illustrative CBAM rate promised for autumn 2026 had not been published as of mid-October, so importers cannot yet budget with confidence. Getting verified emissions data from overseas suppliers is hard for a small business with limited purchasing power, especially when the producer is several tiers back in the supply chain.
The administrative burden is also real. Businesses must keep records for six years and file quarterly returns from 2028. Penalties apply for late registration, missed filings and errors.
The relationship with Europe adds further uncertainty. On 12 October, the Prime Minister confirmed to Parliament that a deal on emissions trading is on the agenda for the UK–EU summit in Brussels on 20 November. Linking the two emissions trading systems could exempt goods moving between the UK and EU from each other's CBAM. No agreement has been confirmed, though, and HMRC states there are currently no exempt jurisdictions.
Practical Steps to Take Now
Businesses that import or export covered goods can take several steps before 1 January 2027:
- Check commodity codes: Review import records to find purchases that fall under the five CBAM sectors. Downstream products such as fixings and fabricated metal parts are easy to overlook.
- Estimate your exposure: Compare 12-month spend on covered goods against the £50,000 threshold. Use the published default values to model a worst-case liability.
- Engage suppliers early: Ask overseas suppliers whether they can provide verified, installation-level emissions data. Because of the markup, actual data will usually produce a lower charge than the defaults.
- Confirm the named importer: Review Incoterms (the standard terms that set out who handles shipping and customs) and customs arrangements, so it is clear which party carries the liability.
- Build carbon data capability: CBAM is one of several pressures making accurate emissions data a commercial necessity. Customer requests, lender requirements and UK SRS reporting by listed companies are others.
Carbon data is already affecting commercial outcomes. A survey reported by Carbon Pulse on 13 October found that 63% of UK firms had lost or delayed deals partly because of gaps in their carbon emissions data.
The Path Forward
With the default values published, the UK CBAM moves from consultation to compliance. For most SMEs, the immediate cost will depend on how much they import and from whom. The longer-term impact is broader: carbon emissions are becoming a priced part of the goods businesses buy and sell.
Businesses that understand their supply chain emissions now will be better placed to manage costs, answer customer questions and respond to whatever the November summit delivers. Preparing for CBAM is part of a wider journey towards carbon management that is measurable and credible.
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