The Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026

Published: Wed 15th Jul 26

These regulations establish temporary administrative rules for the introduction of the UK Carbon Border Adjustment Mechanism (CBAM) between January 2027 and June 2028.

They direct HM Revenue and Customs (HMRC) to apply modified registration deadlines, accounting periods, and payment dates for importers who trigger CBAM liabilities during the initial rollout.

The measures apply to any person or business importing carbon-intensive goods that fall under the scope of the Finance Act 2026.

Arguments For

The regulations establish a transition period for the introduction of the Carbon Border Adjustment Mechanism (CBAM) to manage the initial administrative burden on importers.
The Treasury states that the modifications delay the obligation to register for CBAM for those who trigger the requirement in 2027.
The document specifies that the first accounting period is extended to a full year (January to December 2027) rather than the standard shorter periods, providing more time for initial compliance.
Proponents note that the instrument aligns penalty schedules with these modified transitory deadlines to ensure consistency in tax administration.

Arguments Against

Importers may face complexity in tracking different accounting period lengths, as the periods transition from annual (2027) to quarterly (2028) within an 18-month window.
Legal analysts might point out that the temporary modification of primary legislation (Finance Act 2026) via secondary regulations can create a fragmented regulatory landscape for tax professionals.
Affected parties may express concern that while registration is delayed until January 2028, the underlying liability for carbon charges still accrues from 1 January 2027.

—(1) These Regulations may be cited as the Carbon Border Adjustment Mechanism (Transitory Provision) Regulations 2026 and come into force on 1st January 2027.

(2) Regulation 2(2) has effect in relation to any person who triggers registration in 2027.

(3) Regulation 2(3) and (4) have effect in relation to charges to CBAM arising in the period beginning with 1st January 2027 and ending with 30th June 2028.

(4) Regulation 3 has effect in relation to returns in respect of accounting periods ending with or before 30th June 2028.

This section establishes the official name of the regulations and sets the commencement date as 1 January 2027.

It defines the specific timeframes and persons to whom the temporary rules apply.

Specifically, it limits the scope to registration triggers occurring in 2027 and tax charges or returns generated between January 2027 and June 2028.

—(1) Schedule 17 to the Finance Act 2026 has effect with the following modifications.

(2) In paragraph 2 (duty to register with HMRC), in sub-paragraph (4) '31st January 2028' is treated as substituted for the words from 'the period of 30 days' to the end.

(3) In paragraph 6 (payment and accounting periods), the following is treated as substituted for sub-paragraphs (2) and (3)—

'(2) The accounting periods are—

(a) for 2027, the period beginning with 1st January 2027 and ending with 31st December 2027;

(b) for 2028—

(i) the period beginning with 1st January 2028 and ending with 31st March 2028;

(ii) the period beginning with 1st April 2028 and ending with 30th June 2028.

(3) Payment in respect of an accounting period must be made—

(a) in respect of the accounting period ending with 31st December 2027, before the end of 31st May 2028;

(b) in respect of the accounting period ending with 31st March 2028, before the end of 31st July 2028;

(4) In paragraph 7 (returns), the following is treated as substituted for sub-paragraph (2)—

'(2) A return under this paragraph must be made—

(a) in respect of the accounting period ending with 31st December 2027, before the end of 31st May 2028;

(b) in respect of the accounting period ending with 31st March 2028, before the end of 31st July 2028;

This section modifies the primary tax legislation to provide more time for initial compliance.

It extends the registration deadline for new importers to 31 January 2028 and creates a single 12-month accounting period for the year 2027, followed by two quarterly periods in 2028.

It also sets specific deadlines for filing tax returns and making payments, requiring the final 2027 settlement to be completed by 31 May 2028.

In Schedule 24 to the Finance Act 2021 (penalties for failure to make returns etc), in the Table in paragraph 2(1), the following is treated as substituted for item 6—

| '6 | Carbon border adjustment mechanism Return under paragraph 7(1) and (2)(a) of Return under paragraph 7(1) and (2)(b) or (c) |'

This section updates the existing penalty framework for late tax returns to include the new CBAM filing dates.

It ensures that HMRC can issue penalties if importers fail to meet the modified deadlines for the 2027 annual return or the 2028 quarterly returns.

This brings CBAM into the standard UK tax penalty regime for the duration of the transitory period.

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