24-hour hotline : 23 922 922
e-mail address : enquiry@tid.gov.hk
Ref. : EIC 294/3
28 April 2026
Dear Sirs,
Commercial Information Circular No. 402/2026
United Kingdom (UK) : Carbon Border Adjustment Mechanism
The UK Government has introduced the primary legislation for its Carbon Border Adjustment Mechanism (CBAM) in the Finance Act 2026, which aims to address the risk of carbon leakage by equalising the price of carbon between domestic products and imports for achieving the UK’s climate objectives. The primary legislation was enacted on 18 March 2026 and can be accessed at: https://www.legislation.gov.uk/ukpga/2026/11.
2.The UK CBAM will apply from 1 January 2027. In gist, it will apply to five types of goods listed in Schedule 16 of the Act (i.e. aluminium; cement; fertilisers; hydrogen; and iron and steel) importing into the UK. It will apply only to direct emissions embodied within imported goods, including emissions embedded in relevant precursor goods used in the production of complex CBAM goods.
3.The UK CBAM operates as a direct tax administered by HM Revenue & Customs (HMRC). Importers must register with HMRC if they meet or exceed the minimum registration threshold (i.e. GBP 50,000 of imported CBAM goods over the previous 12 months) and submit a tax return following the end of each accounting period. The accounting period for CBAM will be annual for the first calendar year and will shift to quarterly from 2028 onwards. Returns and payments will be due five months after the end of the first accounting period (due by 31 May 2028 for the accounting period of 1 January to 31 December 2027) and will gradually transition to a two-month return and payment window. Importers may claim carbon price relief which will reduce their UK CBAM tax if the imported goods are subject to qualifying carbon pricing scheme(s) in the place of origin.
4.The secondary legislation for the UK CBAM will be introduced within 2026 to lay down detailed conditions for its application, including registration processes, quarterly reporting requirements, calculation and verification of the embodied emissions and payment mechanisms. For details, please refer to the UK Government’s dedicated page on the policy summary of its CBAM, which is available at: https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-cbam-policy-summary/carbon-border-adjustment-mechanism-cbam-policy-summary.
5.For enquiries concerning the content of this circular, please contact the undersigned at 2398 5684.
Yours faithfully,
(Miss Jenny MOK)
for Director-General of Trade and Industry
Note: While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.