UK businesses importing steel, aluminium, cement, fertiliser or hydrogen products face a new compliance burden from 1 January 2027, when record-keeping requirements for the UK’s Carbon Border Adjustment Mechanism (CBAM) take effect. And in a detail that will catch many smaller firms off guard, using a customs broker or freight forwarder does not pass the responsibility on.
CBAM is a new tax designed to tackle so-called carbon leakage, ensuring that certain highly traded, carbon-intensive goods imported into the UK face a comparable carbon price to equivalent goods produced here. The mechanism, already a sticking point in the UK’s trade negotiations with India, is part of the government’s push towards net zero by 2050.
For the thousands of SMEs that import components, materials or finished goods in the five affected sectors, the practical impact starts well before any tax is due.
Records first, tax later
From 1 January 2027, any business importing CBAM goods must keep records relating to those imports, and keep them for six years. Businesses that fail to keep adequate records may be liable for penalties, so HMRC’s message is clear: find out what you need to do beforehand and get it right.
Crucially, outsourcing your imports offers no escape. If a customs broker, freight forwarder, haulier or tax agent completes the import declaration on your behalf, you may still be classed as the importer and therefore responsible for meeting CBAM obligations.
The record-keeping duty applies regardless of whether a business will ultimately need to register for the tax. Full details of who needs to register and what records to keep are on GOV.UK.
Registration opens in 2028
Registration for CBAM opens on 1 January 2028. Businesses must register with HMRC if the value of CBAM goods imported over the previous 12 months exceeds the £50,000 threshold, or if they expect to import above it within the next 30 days.
That threshold is low enough to capture plenty of small manufacturers, builders’ merchants, fabricators and construction firms, not just large industrial importers.
Registered businesses must submit a return, even if there is no tax to pay, and settle any liability for the 1 January to 31 December 2027 accounting period by 31 May 2028.
HMRC says further guidance on CBAM rates, default emissions values and the monitoring, reporting and verification of emissions will be published in the coming months.
Another layer for stretched small firms
The timing will test smaller importers. Research shows SMEs are already falling behind on sustainability reporting, with just one in eight classed as net zero ready and two-thirds unfamiliar with basic emissions categories.
CBAM also lands amid a wider debate about carbon pricing, with plans to align UK carbon rules with the EU’s scheme drawing both criticism over costs and support from industries hoping to sidestep the EU’s own border levy.
For now, the advice for any business importing goods in the five sectors is simple. Check on GOV.UK whether your goods are in scope, work out whether you or your agent counts as the importer, and get your record-keeping in order before January 2027. Six years is a long time to keep paperwork, but a penalty from HMRC will feel longer.
