UK CBAM relief: HMRC names the overseas carbon pricing schemes that qualify
When we covered HMRC’s July guidance package, one question stood out: which foreign carbon prices would the UK actually recognise? On 27 August HMRC answered it, publishing the provisional list of overseas carbon pricing schemes that qualify for carbon price relief under the UK CBAM.
Who made the list
The list runs to 16 schemes. It includes the EU Emissions Trading System and its Swiss counterpart, China’s national ETS, the Korean and New Zealand emissions trading systems, Japan’s GX-ETS, Australia’s Safeguard Mechanism, Canada’s federal Output-Based Pricing System, India’s Carbon Credit Trading Scheme, the Kazakhstan and Montenegro emissions trading systems, the carbon taxes of Singapore, South Africa, Chile and Serbia, and the Taiwan carbon fee. HMRC stresses that the list is provisional, based on information available as of 19 June, and will be updated as further schemes are assessed. Regional schemes not named may still qualify.
What relief actually covers
The mechanics matter more than the roll call. Relief reduces UK CBAM liability by the effective carbon price the imported goods have already borne, and “effective” is doing real work in that sentence. Emissions covered by free allowances do not qualify, because no carbon price was actually paid on them. Rebates and refunds reduce the claim too. And the whole thing must be evidenced: the claim rests on a Carbon Pricing Verification Form completed by an accredited, independent verifier, with relief capped at the CBAM liability itself.
The legal framework sits in the Calculation of CBAM Rate and Determination of Carbon Price Relief Regulations 2026, made on 13 July and in force from 1 January 2027 alongside the tax.
The EU ETS entry is the headline
For EU producers selling into the UK, recognition of the EU ETS means their carbon costs will count against the UK charge even though the talks on linking the two emissions trading systems remain unfinished. That is a practical cushion while the diplomats work. The free allowance caveat cuts into it, though. Most EU industrial installations in CBAM sectors still receive a large share of their allowances free, and only the portion of emissions actually paid for earns relief. The paperwork will need to show precisely that split.
What importers should do
Map your suppliers against the list. For each supplier in a qualifying scheme, establish what effective carbon price their installation actually pays once free allocation, rebates and exemptions are stripped out, and start the conversation about evidence now. The verification form needs an accredited verifier’s signature, and that takes time to arrange. Suppliers outside any qualifying scheme are a different conversation: their goods carry the full UK CBAM rate, and that cost difference belongs in your 2027 sourcing decisions.
CBAM-Assured helps importers and their suppliers assemble and verify the evidence that relief claims will need. Contact us before January makes it urgent.