The ICAEW has asked for more time and comprehensive guidance for businesses to implement an effective UK Carbon Border Adjustment Mechanism (CBAM).

A CBAM applies a charge to imported goods based on the embedded emissions within them and the government has announced that a UK CBAM will be introduced from 1 January 2027.

The Institute of Chartered Accountants England & Wales (ICAEW), in response to the government's Consultation on the topic, supports the introduction of a CBAM. The institute agrees it's an important measure in addressing carbon leakage and promoting cleaner production globally but the proposed timetable is thought to be overly ambitious.

It points to the proposed five-month deadline after the first accounting period as being too short a time frame in which to obtain accurate emissions data from global supply chains. Additionally, a move to quarterly reporting from 2028 imposes a significant administrative burden on businesses.

The ICAEW proposes a more gradual transition and six-monthly reporting in year two to allow businesses extra time to get to grips with the new rules.

Useful guides on this topic

Climate Change Committee urges Treasury to use tax to achieve Net Zero
The Climate Change Committee (CCC) has published ‘Progress in reducing emissions 2022, Report to Parliament’. In part, it calls on HM Treasury to review the tax system as to how it can best support the transition to Net Zero.

Net Zero: Call for evidence
The Department for Business Energy and Industrial Strategy (BEIS) has released a consultation Net Zero: Call for evidence’. This is part of an independent review of the government’s approach to delivering its net zero target.

Electric Vehicles: Update 2023
With the increased recent focus on climate change and the government’s plan to ban new petrol and diesel car sales by 2030, we provide an update of the tax issues businesses and their employees should consider when acquiring or providing an electric vehicle

CO2 emissions: Ultra-low emission cars from 2019-20
CO2 emissions bands and percentages that apply from 2019-20 to 2022-23.

Enhanced Capital Allowances: Energy saving plant (inc. vehicles)
What are Enhanced Capital Allowances (ECAs)? What is energy-saving plant and machinery? What allowances are available?  

External link

Businesses need more time to implement CBAM, says ICAEW