Measure
The government intends to legislate in the Finance Bill 2025/26 to introduce the Carbon Border Adjustment Mechanism (CBAM) from 1 January 2027. The inclusion of indirect emissions within the scope of the CBAM will be delayed until 2029 at the earliest.
The government has also announced a number of changes to the initial draft legislation following consultation.
Detailed guidance on CBAM will be published by HMRC ahead of 2027.
In addition, the government has issued a new policy paper which confirms that CBAM will affect goods in the aluminium, cement, fertiliser, hydrogen and iron and steel sectors and will raise £140 million from 2027-2028 and £180 million from 2028-2029. It also confirms that the minimum registration threshold will be set at a value of £50,000 as per previous announcements.
This will affect businesses who import £50,000 or more of specified goods from the aluminium, cement, fertiliser, hydrogen and iron and steel sectors.
It is confirmed that the CBAM will be introduced from 1 January 2027, though this does not include indirect emissions.
The introduction of the policy changes following the consultation provides clarity regarding the implementation and practicalities of CBAM in the UK. Businesses will likely welcome confirmation from the government that the CBAM is to be introduced, allowing time to prepare for its introduction in 2027. Furthermore, the delay of the inclusion of indirect emissions into the CBAM until 2029 will likely be welcomed by those businesses affected, providing additional time to bear the associated indirect costs.