Updated October 12, 2026: this post has been corrected. The rate formula sits in section 149 of the Finance Act 2026, and SI 2026/809 still needed House of Commons approval on October 12, 2026 (approval period ends October 20, 2026). SI 2026/802 and SI 2026/809 were laid on July 14, and SI 2026/830 was made on July 14. HMRC guidance says registration opens by January 1, 2028, not in late 2026. No UK CBAM rate has been published. HMRC's provisional list of qualifying carbon pricing schemes (August 27, 2026) includes the EU ETS. SI 2026/994 and SI 2026/995 followed on September 8, 2026.
The UK CBAM rulebook for the January 2027 launch is now largely complete. The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026/809) were made on July 13, 2026, laid before the House of Commons on July 14, and come into force on January 1, 2027. The instrument supplies the detail of the rate formula in section 149 of the Finance Act 2026, under which the Treasury derives the UK CBAM rate from average UK ETS prices, and sets how importers claim relief for carbon prices already paid abroad.
It affects every UK importer of aluminium, cement, fertilizers, hydrogen, and iron and steel above the £50,000 registration threshold, and every non-EU producer selling into both the EU and UK markets from 2027.
The timing beat expectations. When the draft version of the rate regulations closed technical consultation on March 24, 2026, final instruments were expected in autumn 2026. Instead, the government moved in mid-July with a package of three instruments covering administrative provisions, rate calculation, and transitory provisions. The gov.uk CBAM policy summary gives July 13 as the laying date; the instruments themselves record SI 2026/802 and SI 2026/809 as made on July 13 and laid on July 14, and SI 2026/830 as made on July 14.
One parliamentary step remains for SI 2026/809, the only instrument in the package under the made affirmative procedure. Under section 157(10) of the Finance Act 2026 it ceases to have effect unless the House of Commons approves it by resolution within 28 days of being made, a period that section 157(13) extends for adjournments of more than 4 days. Parliament's statutory instruments record showed no approval on October 12, 2026 and an approval period ending on October 20, 2026.
What SI 2026/809 contains
SI 2026/809 sets the detailed rules behind the two numbers that determine every UK CBAM bill: the sector-specific rate per tonne of embedded CO2e, whose formula is in section 149 of the Finance Act 2026, and the relief subtracted for carbon prices already paid in the country of origin. The instrument runs to 15 regulations across seven parts. The operative parts are listed below.
- Part 2 (regulations 3 and 4): calculation of the average UK ETS price, and the "adjustment to be applied to the reduction of the average ETS price in relation to free allowances"
- Part 3 (regulations 5 and 6): eligibility conditions and qualifying carbon pricing schemes for carbon price relief
- Part 4 (regulations 7 to 9): verification and accreditation requirements for relief claims
- Part 5 (regulations 10 to 13): calculation of the effective carbon price and of the relief due
- Parts 6 and 7: currency conversion and record keeping
The made version keeps the two-step rate architecture and the relief design consulted on in February and March 2026. What changes is legal status: the rate calculation rules and the relief mechanism are made regulations instead of consultation drafts, although SI 2026/809 still needs the approval of the House of Commons to stay in effect.
How the UK CBAM rate will be set
The UK CBAM rate for each sector equals the average UK ETS auction price for the preceding quarter, reduced by an adjustment reflecting the free allowances UK producers still receive. Section 149(3) of the Finance Act 2026 sets that two-step formula, with the Treasury calculating and publishing the rate; regulation 3 governs the average ETS price and regulation 4 the free-allowance adjustment. The gov.uk policy summary confirms that rates are "calculated and published by the government at the beginning of each quarter" and "reflect the effective carbon price in the UK".
Because free allocation shrinks year by year, the rate rises over time even if UK ETS auction prices stay flat. The sector baselines, the annual reduction factor, and a worked comparison with the EU price are covered in the UK CBAM rate guide.
The cadence mirrors the EU's quarterly certificate price, but the numbers will differ. The EU published a Q2 2026 CBAM certificate price of €75.28/tCO₂e from EU ETS auctions; the UK rate will track the separate UK ETS market, sector by sector, and no figure exists yet. The first live rates are due at the beginning of the first quarter of 2027, built on fourth-quarter 2026 UK ETS auction prices.
Carbon price relief: how foreign carbon prices cut the bill
Carbon price relief allows a UK CBAM registrant to reduce its liability by the effective carbon price already paid on the same emissions under a qualifying foreign carbon pricing scheme, capped at the CBAM amount owed. Per the gov.uk policy summary, a claimant must provide a completed "carbon pricing verification form" on an HMRC template and demonstrate that the emissions were covered by a "qualifying carbon pricing scheme". Regulation 12 sets the calculation of the effective carbon price, regulation 13 the relief due, and Part 4 the verification and accreditation requirements behind every claim.
The EU is settling the same design question on its side of the Channel: member states are due to vote in September on which foreign carbon prices count against EU CBAM bills under Article 9 of Regulation (EU) 2023/956. The two regimes are not symmetrical: HMRC's provisional list of qualifying carbon pricing schemes, published August 27, 2026, includes the EU ETS, while the EU had recognized no third-country carbon price under Article 9 as of October 12, 2026. That gap is part of the UK CBAM and EU CBAM double-payment risk for exporters serving both markets.
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The July package and what is still pending
The July package comprises three instruments, made on July 13 and 14, 2026 and covering administrative provisions, rate calculation, and transitory provisions, leaving the Emissions and Verification Regulations as the only major piece still in draft. The table below places SI 2026/809 within the full UK CBAM legislative framework as of July 2026.
| Instrument | Covers | Status |
|---|---|---|
| Finance Act 2026 (primary legislation) | Establishes the CBAM charge and the rate formula (section 149) | Enacted; Royal Assent March 18, 2026 |
| CBAM (Administrative Provisions) Regulations 2026 (SI 2026/802) | Record keeping, registration, returns, weight assessment | Made July 13, laid July 14, in force January 1, 2027 |
| CBAM (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (SI 2026/809) | Rate calculation, carbon price relief, currency conversion | Made July 13, laid July 14, in force January 1, 2027; made affirmative, Commons approval pending |
| CBAM (Transitory Provision) Regulations 2026 (SI 2026/830) | Modified dates for registration, payment, and accounting periods, plus related penalties | Made July 14, in force January 1, 2027 |
| Emissions and Verification Regulations | Emissions calculation, monitoring, verification, related records | Draft only; consulted April 9 to May 21, 2026, final version pending |
The draft Emissions and Verification Regulations are the one major outstanding piece. They remain a consultation draft, not law, and the government has indicated final laying later in 2026. Until they land, importers know how the rate per tonne will be calculated but not the final rules for measuring the tonnes. The current position of every instrument, including the two made on September 8, 2026, is kept in the guide to UK CBAM legislation.
What this means for importers facing two regimes
From January 1, 2027, businesses trading across both markets run two live carbon border regimes in parallel, and the UK side now has a near-complete operational rulebook. The UK obligations start with the £50,000 threshold: the two tests behind it are explained in the UK CBAM registration guide. The first accounting period covers all of calendar year 2027, with the return and payment due May 31, 2028, before the system moves to quarterly accounting from January 1, 2028. The charge applies across the whole of the UK, including Northern Ireland.
On the EU side, the definitive phase has been running since January 1, 2026, certificate sales open February 1, 2027, and the first annual declaration is due September 30, 2027. The structural differences (a direct tax to HMRC versus certificates priced off the EU ETS) are mapped in the UK CBAM vs EU CBAM comparison, and the pre-launch preparation steps in the UK CBAM compliance guide. Pressure to soften the overlap is building: a UK commission this month urged reciprocal UK-EU CBAM exemptions, warning of a bill of up to £800 million for UK exporters by 2030.
What happens next
Four milestones remain: House of Commons approval of SI 2026/809, the final Emissions and Verification Regulations, the first published rate, and the opening of HMRC registration. The final emissions rules are expected later in 2026, and the first sector rates are due at the beginning of the first quarter of 2027, built on fourth-quarter 2026 UK ETS auction prices. The government has said an illustrative example rate will be set out in autumn 2026, giving importers their first pounds-per-tonne figure to plan against.
Registration comes after the launch, not before it. HMRC guidance says the registration service, reached through a Government Gateway account, will open by January 1, 2028, and importers who trigger registration during 2027 have until January 31, 2028 to register.
For the full launch framework, from the threshold tests to the tax mechanics, read the UK CBAM guide.