HM Revenue & Customs has published version 1.00 of the UK Carbon Border Adjustment Mechanism system boundaries document. Issued on 13 July 2026, it explains which direct emissions, production processes and precursor goods are relevant when calculating the emissions embodied in goods covered by UK CBAM.
The publication gives importers, overseas manufacturers and accredited verifiers a clearer technical basis for preparing ahead of the mechanism’s introduction on 1 January 2027.
What the New Document Covers
The system boundaries document supports the UK CBAM secondary legislation. It maps commodity codes to goods categories across aluminium, cement, fertiliser, hydrogen, iron and steel, then identifies the emissions and production processes that fall within scope for each category.
For complex goods, the calculation can include direct emissions from the final production process as well as emissions embodied in relevant precursor goods. The document also sets out sector-specific treatments, including the production routes and functional units used to measure emissions.
Businesses may use independently verified actual emissions data or government default emissions values when calculating liability. Where an importer chooses actual data, the relevant information must be obtained from the overseas installation and verified in line with UK requirements.
Why This Matters to Importers
UK CBAM will apply from 1 January 2027. Importers must monitor whether the total customs value of their CBAM goods meets the £50,000 registration threshold under the forward-looking or backward-looking tests.
The new technical document matters because actual emissions reporting may depend on information held several stages upstream. Importers could need data from foreign producers, precursor suppliers and independent verifiers. Commodity codes, production routes, net weight and country of origin will also need to align across customs and CBAM records.
Businesses using government default values may face a lower immediate supplier data burden. However, default values may not always produce the most favourable commercial outcome, particularly where a supplier can demonstrate lower actual emissions.
UK Business Perspective
This development is relevant to manufacturers, engineering businesses, distributors and importers across the UK, particularly those bringing in iron, steel or aluminium products. Businesses should not assume that their customs broker, freight forwarder or overseas supplier already holds all the information required for UK CBAM compliance.
Importers should begin with a detailed review of their products and supply chains. This should include confirming which commodity codes fall within scope, estimating annual import values, identifying the legal importer and checking whether overseas suppliers can provide reliable emissions data.
Purchasing contracts, supplier questionnaires and internal reporting procedures may also need to be updated before the mechanism takes effect.
What Businesses Should Do
Businesses should identify in-scope imports, review commodity classifications and assess whether they are likely to meet the registration threshold. They should also establish who will be responsible for gathering supplier information, maintaining records and preparing CBAM returns.
Where actual emissions data may be used, early engagement with overseas manufacturers will be essential. Companies should also consider how CBAM information will be shared between procurement, finance, customs and sustainability teams.
How TVCC Can Help
TVCC’s customs compliance audit service can review commodity classification, importer responsibilities, customs values, records and internal controls linked to CBAM readiness.
Specialist emissions verification must be completed by an appropriately accredited verifier, but early customs and data preparation can reduce the risk of gaps, delays and unexpected costs.
For support, contact the TVCC trade team on 01753 870560 or email trade@tvchamber.co.uk.
Read the original HMRC publication: https://www.gov.uk/government/publications/carbon-border-adjustment-mechanism-force-of-law-notice-and-reference-document
