A new carbon tax on imported steel, cement, aluminium and fertiliser starts charging businesses on 1 January 2027. Its own guidance says nobody can register to pay it for a year, and the first bill is not due for seventeen months.
Estimated reading time: 7 minutes
In short. HMRC's policy summary for the Carbon Border Adjustment Mechanism (CBAM), updated 16 October 2026 alongside a full package of secondary legislation, confirms that the tax "will commence on 1 January 2027" [1] and applies to anyone importing specified aluminium, cement, fertiliser, hydrogen or iron and steel goods from that date [1]. The same document then states "registration for CBAM will open on 1 January 2028" [1] and that the first returns and payments are not due until 31 May 2028, five months after the first accounting period ends [1]. On penalties, it says only that "HMRC will extend the use of existing powers and penalties to enforce compliance with CBAM where appropriate" [1], without naming a single figure from the schedule it is describing. Two documented mistakes: four stars.
HMRC says the document should be read by "importers of goods from the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors and downstream producers that use these goods in their supply chains", plus overseas operators, verifiers and accreditation bodies [1]. Most of those readers have never dealt with a self-assessed carbon tax before. CBAM exists to stop UK decarbonisation simply pushing emissions overseas, charging "a comparable carbon price" on carbon-intensive imports to the one UK manufacturers already pay [1]. The primary legislation is Part 5 of the Finance Act 2026, and the government's own costing table projects it will raise £30m in 2026-27, rising to a peak of £180m a year by 2028-29, from an estimated 10,000 affected businesses [2]. This is not a minor administrative update. It is a new tax, with its own registration system, its own return cycle and its own criminal offences, and two parts of the government's own account of it do not match the confidence of its framing.
The claims, tested
| The claim | What we found | Verdict |
|---|---|---|
| CBAM "will commence on 1 January 2027" [1], confirmed in the Finance Act itself, which "has effect in relation to goods imported into the United Kingdom on or after 1 January 2027" [3] | The same policy summary states "registration for CBAM will open on 1 January 2028" [1], a full year after the charge begins. The Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026 confirm this is deliberate: they amend Schedule 17 to the Finance Act so that every importer who becomes liable at any point in 2027 has until 31 January 2028 to register, rather than the standard 30 days [4]. The first CBAM return is not due until 31 May 2028, which HMRC's own document attributes to needing time "to provide businesses with sufficient time to obtain supporting information required to complete their first return, whilst also allowing HMRC time to develop and test necessary IT systems" [1]. Meanwhile the Treasury's own costing table already books £30m of CBAM revenue against 2026-27 and £140m against 2027-28 [2], before the system that would let anyone pay a penny of it has opened | A tax that starts charging on day one, books revenue against years when nobody can register, and only reaches its first live return seventeen months after the charge begins, for reasons the document says are about HMRC's own readiness |
| On enforcement, the summary says only: "HMRC will extend the use of existing powers and penalties to enforce compliance with CBAM where appropriate" [1], alongside "criminal offences will also apply for fraudulent evasion and deliberate misstatement of CBAM" [1] | Schedule 17 to the Finance Act, which the summary never quotes, sets a fixed £500 penalty plus £40 for every additional day for failing to notify HMRC of a change in registration details, and a flat £500 penalty for failing to keep required records [5]. It also extends the standard failure-to-notify regime, which can reach the full amount of tax at stake for deliberate and concealed non-registration, and the standard inaccuracy and late-payment penalty schedules, to CBAM [5]. Schedule 18 sets the criminal offences the summary mentions but does not describe: fraudulent evasion of CBAM carries up to 14 years' imprisonment on indictment, and so does deliberately misstating or falsifying CBAM information [6] | A document aimed at first-time importers in cement, fertiliser and steel supply chains signals a penalty regime exists without disclosing that it includes a 14-year maximum sentence |
The mistakes, counted
A tax that starts before the system to pay it exists (1). CBAM liability, record-keeping duties and exposure to its criminal offences all begin on 1 January 2027 [1] [3], but the registration system does not open until 1 January 2028 and the first return is not due until 31 May 2028 [1]. The Transitory Provision Regulations show this was planned, not an oversight, by giving every business that becomes liable in 2027 a single, uniform deadline of 31 January 2028 to register [4], which is a fairer design than a rolling 30-day clock would have been. But it does not change the underlying fact: the Treasury is forecasting and recognising tax revenue from a system that, by its own document's account, exists on paper for a year before it exists in practice, and the reason given is HMRC's own IT readiness [1] [2].
The penalty section undersells its own penalties (2). "Existing powers and penalties... where appropriate" [1] describes a regime that, read in the schedules it points to but does not quote, includes fixed daily penalties, a tax-geared failure-to-notify charge, and a 14-year maximum sentence for fraud or deliberate misstatement [5] [6]. The document names the stakeholders who should read it, including ordinary importers and downstream producers with no prior experience of a self-assessed import tax [1], then gives those same readers no indication of how serious the consequences of getting it wrong actually are.
Credit where due
The underlying design has real care in it. The dual forward-looking and backward-looking registration tests protect a business that might otherwise be caught out by a single rigid method of measuring the £50,000 threshold [1]. The monitoring and verification methodology is deliberately built "to support interoperability with the EU CBAM, helping to reduce administrative burdens" for businesses already complying with the European scheme [1]. And the transitional registration deadline, uniform rather than rolling, is a genuinely fairer way to handle the first year than the Act's default 30-day rule would have been [4].
Verdict
Four stars, from two documented mistakes. Neither is a legal error: the dates are lawful, and the penalties are properly made law. The mistake is in what the summary chooses to tell the people it says should read it. It states the commencement date plainly but lets the year-long gap before anyone can register pass as a scheduling detail rather than the admission it is. It names a penalty regime without naming a single figure in it, up to and including a 14-year maximum sentence. A document written for importers who have never filed a carbon border return before should not require them to open two schedules of primary legislation to find out what is actually at stake.
The star score counts two documented mistakes. First, CBAM charges importers from 1 January 2027 but its own registration system does not open until 1 January 2028, with the first return and payment not due until 31 May 2028, seventeen months after the charge begins; the Treasury's own costing table nonetheless books revenue against 2026-27 and 2027-28. Second, the policy summary describes its enforcement regime only as "existing powers and penalties... where appropriate" without disclosing any of the figures in the Finance Act schedules it is summarising, including fixed daily penalties and a 14-year maximum sentence for fraud or deliberate misstatement. Two falls in the 1 to 3 band: four stars; the bands are on the ratings page. This piece makes no finding about the conduct of any named official; the policy summary's own structure and omissions are institutional facts. Checked directly against the HMRC policy summary, the Finance Act 2026, the Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026 and the published tax information and impact note, all fetched 19 October 2026.
Sources
- Carbon Border Adjustment Mechanism (CBAM): policy summary, HM Revenue and Customs, updated 16 October 2026
- Introduction of Carbon Border Adjustment Mechanism, tax information and impact note, HM Revenue and Customs
- Finance Act 2026, section 158, legislation.gov.uk
- Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026, regulation 2, legislation.gov.uk
- Finance Act 2026, Schedule 17, legislation.gov.uk
- Finance Act 2026, Schedule 18, legislation.gov.uk