The rates
UK CBAM rates for 2027: HMRC's illustrative figures by sector
Updated
HMRC's illustrative 2027 rates run from £1.45 per tonne of CO2e for fertiliser to £9.79 for aluminium. Each is the UK carbon price, discounted for the free allowances the sector still receives in the UK ETS.
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How this calculator works
- The rates. HMRC's illustrative 2027 rates per tonne of CO2e: iron and steel £9.69, aluminium £9.79, cement £8.78, fertiliser £1.45, hydrogen £9.24. They are illustrative: the rate for each quarter is worked out from the preceding quarter's average UK ETS price. (HMRC: illustrative CBAM rates and worked example)
- How a rate is built. HMRC's worked example for cement: the Q3 2026 average UK ETS price of £58.15, times one minus the sector's 87.1% baseline free allocation times the 97.5% phase-out reduction factor, gives £8.78 per tCO2e. (HMRC: illustrative CBAM rates and worked example)
- Charge, relief and liability. HMRC: the CBAM charge is the imported embodied emissions times the CBAM rate; carbon price relief is the relevant embodied emissions times the effective carbon price; the liability is the charge less the relief. The calculator never lets relief exceed the charge. (HMRC: CBAM policy summary)
- Default values. Where you have no verified supplier data, HMRC publishes a default value per CN code, in tonnes of CO2e per tonne of product: 2.434 for anhydrous ammonia, for example. (HMRC: fertilisers default values)
- Registration. HMRC sets the registration threshold at £50,000 of CBAM goods, tested backward over the preceding 12 months and forward over the next 30 days. The calculator applies the backward test only. (HMRC: CBAM policy summary)
Illustrative 2027 rates by sector
| Sector | Illustrative CBAM rate per tCO2e | Source |
|---|---|---|
| Iron and steel | £9.69 | HMRC: illustrative CBAM rates and worked example |
| Aluminium | £9.79 | HMRC: illustrative CBAM rates and worked example |
| Cement | £8.78 | HMRC: illustrative CBAM rates and worked example |
| Fertiliser | £1.45 | HMRC: illustrative CBAM rates and worked example |
| Hydrogen | £9.24 | HMRC: illustrative CBAM rates and worked example |
How the rate is worked out
HMRC's worked example for cement takes the Q3 2026 average UK ETS price of £58.15 per tCO2e and multiplies it by one minus the sector's 87.1% baseline free allocation percentage times the 2027 phase-out reduction factor of 97.5%. That gives £8.78.
Source: HMRC: illustrative CBAM rates and worked example
The free allowance is phased out gradually: HMRC's factsheet says over an indicative time frame of 9 years, so the rates rise as free allocation falls.
Source: HMRC: CBAM factsheet
This page is information, not tax advice.