UK CBAM Default Values: One Value for All Countries of Origin and a Choice That Cannot Be Corrected

HMRC publishes default values and first rates

On 16 October 2026, HM Revenue & Customs (HMRC) published the default values for the UK CBAM and the first illustrative CBAM rates for each sector. This makes it possible, for the first time, to estimate what imports of steel, aluminium, cement, fertilisers and hydrogen into the United Kingdom will cost from 1 January 2027. For manufacturers and traders with UK customers, a comparison with the EU CBAM is worthwhile, because the UK default values follow a different logic.

The UK rate already reflects free allocation

UK importers pay a tax rate per tonne of CO₂e that is set in advance for each sector. It is derived from the average UK ETS auction price in the preceding quarter, reduced by the share of free allocation in the sector. For the illustrative rates, HMRC used the July to September 2026 average of GBP 58.15 per tonne and a phase-out reduction factor of 97.5 percent for 2027. This results in GBP 9.69 for iron and steel, GBP 9.79 for aluminium, GBP 9.24 for hydrogen, GBP 8.78 for cement and GBP 1.45 for fertilisers.

In HMRC's cement example, free allowances cover 87.1 percent of direct emissions, so importers bear roughly 15 percent of the full carbon price. The EU, by contrast, applies the full certificate price and deducts free allocation via product benchmarks, multiplied by the CBAM factor of 95 percent for 2027. HMRC stresses that the rates are not forecasts. The binding rates for the first quarter of 2027 will be published before the end of the year.

One value per CN code, whatever the country

The UK default values apply per eight-digit CN code, regardless of the country of origin. According to HMRC, they are based on EU data calculated to the same system boundaries, weighted by the composition of UK imports and excluding imports from the EU. A 10 percent mark-up is already included in all sectors except fertilisers. The values apply from 1 January 2027 to 31 December 2028, and from 2029 the government intends to set one value per good per country. Legally, they are set out in an HMRC notice that is to have the force of law but so far exists only in draft.

Since January, the EU has applied values per country of origin under Implementing Regulation (EU) 2025/2621 as corrected by Regulation 2026/1740. Where no country value exists, the value for other countries applies. A mark-up is added to the total value, 10 percent in 2026, 20 percent in 2027 and 30 percent from 2028, and 1 percent for fertilisers. For hot-rolled coil (CN 7208 39 00), the UK value for 2027 is 3.468 tonnes of CO₂e per tonne. In the EU, the 2027 values including the mark-up are 5.136 tonnes for India, 3.824 tonnes for China and 2.914 tonnes for Türkiye. Suppliers from countries with low EU values therefore lose their advantage in the UK unless they provide actual data.

Indian hot-rolled coil: around GBP 34 in the UK, around EUR 316 in the EU

A sample calculation for one tonne of Indian hot-rolled coil using default values shows the order of magnitude. In the UK, 3.468 tonnes multiplied by GBP 9.69 gives around GBP 34. In the EU, free allocation is deducted from the Indian value of 5.136 tonnes, meaning the benchmark of 1.370 tonnes multiplied by 95 percent. This leaves 3.83 tonnes, which at the third-quarter 2026 certificate price of EUR 82.32 comes to around EUR 316.

The calculation depends on assumptions, above all the EU certificate price in 2027 and the final UK rates. The gap is large enough, however, that for most suppliers the UK CBAM will mainly be a question of data and administration in 2027. As free allocation in the UK ETS is phased out further, the rates are likely to rise, and HMRC will recalculate them every quarter.

Choosing default values in the UK cannot be undone

In the EU, declarants may choose between actual emissions and default values under Article 7(2) of the CBAM Regulation. In the UK, HMRC makes clear that a return based on default values cannot later be amended with actual emissions data. It is also not possible to combine actual values for precursors with a default value for the final good.

For manufacturers with UK customers, the decision therefore has to be made per CN code before the first return. Suppliers that can provide verified data below the UK default value should agree this with their customers before the end of the year, based on the verification requirements of the UK emissions regulations that we covered in Issue 111. For goods from the EU, an exemption remains tied to linking the two emissions trading systems, which has not yet been agreed.

Outlook

HMRC will publish the binding rates for the first quarter of 2027 before the end of the year and is accepting feedback on its technical guidance on monitoring, reporting and verification until 13 November. On 20 November, the EU-UK summit will show whether the ETS link goes ahead. Until then, suppliers should set the UK default value for their most important CN codes against their own emissions data and decide where verified data pays off.

Support

If you would like to understand how the UK default values affect your deliveries to the United Kingdom, for example for which CN codes verified data pays off against the UK default value and how costs compare with the EU CBAM, please get in touch at helge@kolum.earth.