Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 22, 2024

UK | Consultation launched on proposed UK Carbon Border Adjustment Mechanism

On 21 March 2024, the United Kingdom (UK) Government published a "Consultation on the introduction of a UK carbon border adjustment mechanism (UK CBAM)" (the Consultation) asking for views on the design and administration of the new UK CBAM, which is expected to apply from 1 January 2027.

As currently proposed, the UK CBAM will apply to imports of certain carbon-intensive imported goods from the following sectors: aluminum; cement; ceramics; fertilizers; glass; hydrogen; and iron and steel.

The Consultation closes on 13 June 2024.

The UK Consultation in further detail

The UK CBAM will place a carbon levy on some of the most emissions-intensive industrial goods imported into the UK that are at risk of carbon leakage, ensuring that a carbon price is paid regardless of where the goods are produced.

The following chapters in the Consultation document set out what the Government is consulting on and include specific questions on a range of issues:

  • Chapter 5: Applying the UK CBAM — understanding which sectors and goods are in scope
  • Chapter 6: Calculating the UK CBAM liability — understanding how the liability for the CBAM will be calculated, including emissions reporting, default values, the UK's carbon price and adjustments for carbon prices applicable overseas
  • Chapter 7: Administration — payment and compliance of the UK CBAM

The key elements of the Consultation relate to:

What the CBAM will apply to: This includes sectoral and product scope, and exemptions. The UK Government has included a list of proposed Harmonized System (HS) codes covering aluminum, cement, ceramics, fertilizer, glass, hydrogen, iron and steel. The UK Government has said that only goods in scope of the UK Emissions Trading Scheme (UK ETS) if produced domestically and at risk of carbon leakage will be considered for potential inclusion within the scope of the UK CBAM.

How the CBAM liability will be calculated: The UK Government has invited comments on principles set out for the calculation of embodied emissions and consideration of the price of carbon paid oversees. A dual approach will be used for determining emissions embodied within imported goods, using either:

  • Default values
  • Data on the actual emissions embodied within CBAM goods

The UK Government's current stance is that the default values would be valid for at least an initial period of 2027–2030.

How the CBAM will operate: Questions in this section relate to the administration of, payment to and compliance with the UK CBAM regime. The main points of consideration include a higher threshold to register under the UK CBAM regime than the EU CBAM but the same quarterly declaration schedule from 2028 onward. The first UK CBAM payment would be due in May 2028.

Response to the Consultation

EY tax and trade professionals will be engaging throughout the consultation period with the Government departments responsible for carbon leakage (His Majesty's Revenue and Customs (HMRC), HM Treasury, the Department for Business and Trade, and the Department for Energy Security and Net Zero) and we will respond formally to the Consultation.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (United Kingdom)

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more