HMRC publishes illustrative UK CBAM rates and default values: GBP 9.69 per tonne CO2e for steel, nothing binding yet

On October 16, 2026 HMRC published illustrative UK CBAM rates for the five sectors and the default values importers will use from January 1, 2027 when they have no verified actual emissions. The illustrative rate for iron and steel is GBP 9.69 per tonne CO2e. HMRC states that the rates "do not create or imply any tax liability", and the default values still sit in a notice titled "Draft". The UK CBAM is a tax, separate from the EU CBAM, and applies to goods imported into the UK from January 1, 2027.

The five illustrative rates

The rates show what would apply from January 1, 2027 on current data; the binding rates for January to March 2027 follow before the end of 2026.

Source: HMRC, Illustrative CBAM rates (and worked example), October 16, 2026.

The inputs are the average UK ETS price for July to September 2026, GBP 58.15 per tonne CO2e, and the free allowance phase-out reduction factor for 2027, 97.5%, which is the same for all five sectors. HMRC's worked example for cement uses a baseline free allocation percentage of 87.1%: GBP 58.15 × [1 − (87.1% × 97.5%)] = GBP 8.78.

HMRC says the figures "should not be interpreted as forecasts or as the rates that will apply when CBAM liability begins". The underlying data "is likely to change" before January 1, 2027, because the UK ETS Authority is still checking the baseline free allocation data. The rates that apply to imports from January 1 to March 31, 2027 will be published before the end of 2026, and then every quarter. How the rate is built is explained in our guide to the UK CBAM rate.

The default values: 2027 and 2028, with a 10% mark-up

Every UK CBAM good now has a published default value, in force from January 1, 2027 to December 31, 2028 under a notice that is still a draft.

HMRC's default values pages cover aluminium, cement, fertilisers, hydrogen, and iron and steel, in tonnes CO2e per tonne of goods, and replicate the draft force of law notice. The notice sets out the method:

• Basis: EU data, recalculated to "the same CBAM system boundaries as the UK"
• Averaging: one trade-weighted value per good, with EU-origin data left out
• Mark-up: 10% in all sectors except fertilisers, which carry none
• Period: January 1, 2027 to December 31, 2028; the UK plans country-specific values from 2029

Source: HMRC sector pages for iron and steel and for aluminium, published October 16, 2026.

Unlike the EU's tables, the UK publishes one value per good for every origin. The detail is in our guide to UK CBAM default values.

What the figures mean per tonne of goods

Multiplying a default value by the illustrative rate gives the scale of the tax per tonne: about GBP 27.67 for semi-finished steel and GBP 20.15 for unwrought aluminium slabs, before any carbon price relief.

For semi-finished non-alloy steel, 2.856 tCO2e per tonne × GBP 9.69 = GBP 27.67 per tonne. For not-alloyed aluminium slabs, 2.058 × GBP 9.79 = GBP 20.15 per tonne. Both are illustrations on illustrative rates; neither is a liability, and carbon price relief for a carbon price paid abroad would reduce them.

The EU figure for comparable steel is much higher, and the two are not comparable one to one. On the EU side, semi-finished steel from Türkiye (CN 7207 11 14) on default values costs EUR 99.70 per tonne in 2026 at the official Q3 2026 certificate price of EUR 82.32, because the free allocation adjustment is a fixed benchmark deducted from the embedded emissions. The UK rate instead applies the sector's free allocation share to every tonne of emissions, and it starts from a lower UK ETS price.

What is still open

The rate rules are now law in waiting, but the two numbers that decide the first real UK bill are not final yet.

1. The binding rates for January to March 2027, due before the end of 2026.
2. The final default values notice, which replaces the draft; HMRC states that the notices "have not yet commenced and do not currently have the force of law" and gives no date.

The rate regulations themselves are settled. The House of Commons approved SI 2026/809, which sets the rate calculation and carbon price relief, on October 14, 2026 by 319 votes to 115 (division 84); the regulations come into force on January 1, 2027.

The registration deadline for liabilities triggered in 2027 is January 31, 2028, and the first return and payment, covering 2027, is due on May 31, 2028. All dates are on the UK CBAM deadlines page.

What to do now

Map every UK commodity code you import to its default value now, because the default is what you pay on unless you have verified actual emissions.

1. UK importers: list the CBAM goods you import from January 1, 2027, note the default value for each code, and multiply by the illustrative rate to size the budget.
2. Decide where actual data pays: where a supplier's emissions are well below the UK default, verified actual emissions can lower the tax, so ask suppliers for data now. The choice is final per return: HMRC's sector pages state that "If you submit a CBAM return that uses default values, you cannot amend it later with actual emissions data."
3. Collect evidence for relief: a carbon price paid in the country of origin, the EU ETS included, can reduce the liability through carbon price relief.
4. EU importers: nothing changes on the EU side; the EU CBAM applies as before.

If you need a provider for UK CBAM software, supplier data or advice, describe the job on the CBAM help page; cbamguide.com introduces you by email to providers that fit, and the form now has a UK importer option.