UK businesses importing steel, aluminium, cement, fertilizer products or hydrogen face a new compliance burden from 1 January 2027, when the UK’s Carbon Border Adjustment Mechanism (CBAM) record-keeping requirements come into effect. And with details that would make many small firms unwary, using a custom broker or freight forwarder does not pass on responsibility.
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 carbon price comparable to similar goods produced here. The mechanism, already a sticking point in the UK’s trade talks with India, is part of the government’s push to reach net zero by 2050.
For the thousands of SMEs that import components, materials or finished goods in the five affected sectors, the practical impact begins before any tariffs arrive.
Records first, tax later
From 1 January 2027, any business that imports CBM goods must keep records related to those imported goods, and keep them for six years. Businesses that fail to keep adequate records may be liable to fines, so HMRC’s message is clear: find out what you need to do in advance and get it right.
Most importantly, taking your belongings outside does not provide an escape. If a broker, freight forwarder, transporter or customs agent completes the import declaration on your behalf, you may still be classified as an importer and therefore responsible for meeting CBAM obligations.
The record-keeping duty applies regardless of whether the business will eventually need to register for 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 amount of CBM goods imported during the previous 12 months exceeds the £50,000 threshold, or if they expect to import more than this in the next 30 days.
That threshold is low enough to capture many small manufacturers, builders’ merchants, architects and construction firms, not just large industrial importers.
Registered businesses must submit a return, even if there is no tax to pay, and pay any debt for the accounting period from 1 January to 31 December 2027 and 31 May 2028.
HMRC says further guidance on CBM standards, automatic emission rates and monitoring, reporting and verification of carbon emissions will be published in the coming months.
Another layer of small expanded firms
Time will test the small importers. The research shows that SMEs are already lagging behind in sustainability reporting, with just one in eight being considered zero correct and two thirds not knowing the basic categories of sustainability.
CBAM has also sat in the middle of a wider debate on carbon pricing, with plans to align UK carbon rules with the EU system drawing both criticism over the costs and support from industries hoping to circumvent the EU’s border tax.
For now, the advice for any business importing goods into these five sectors is simple. Check on GOV.UK that your goods are available, see if you or your agent count as an incoming buyer, and get your record-keeping in order before January 2027. Six years is a long time to keep paperwork, but the fine from HMRC will feel long.
