By Rebecca Hurford, Tax Manager
Recent changes to the UK’s Automatic Exchange of Information (AEOI) regime have quietly but materially altered the compliance position for many trusts.
Although amendments to the International Tax Compliance Regulations 2015 came into force in July, the guidance has only just been issued.
AEOI forms part of a global tax transparency framework developed by the Organisation for Economic Co-operation and Development.
It incorporates regimes such as FATCA (Foreign Account Tax Compliance Act) and the Common Reporting Standard and is administered in the UK by HM Revenue & Customs (HMRC).
What has actually changed?
The most significant change is not the existence of AEOI itself, but the expansion of mandatory registration.
Trusts that are classified as Financial Institutions must now register with HMRC’s AEOI service even where there is nothing to report.
This is a clear departure from the previous position, where registration was generally only required if a reportable person existed.
In practical terms, this widens the net considerably. Trusts may now fall within scope where:
- More than fifty per cent of the trust’s income comes from investing, reinvesting, or trading in financial assets and those assets are managed on a discretionary basis
- The trust is a Trustee-Documented Trust, which must now register in its own right rather than relying on a trustee’s registration
The registration deadlines are fixed and fast approaching and trusts that already meet the definition of a Financial Institution must register by 31 December 2025 (only a couple of weeks away).
Trusts that become Financial Institutions during 2025 have until 31 January 2026.
While registration is a one-off exercise, the consequences of missing the deadline are far from minor.
The urgency is compounded by the timing of the guidance itself.
Although the law changed months ago, clarification from HMRC and professional bodies has only just emerged.
Many trustees are therefore having to assess their position, confirm investment arrangements, and complete registration within a much shorter window than expected.
The risk of inaction
It is important not to conflate registration with reporting.
Even where a trust has no reportable persons and no annual return will be required, the obligation to register may still apply.
Penalties for failure to comply have been strengthened under the amended regulations and can include fines for failing to register, late returns, and inaccurate information.
The practical takeaway for trustees
Trustees should be reviewing the trust’s income profile, confirming with investment managers whether arrangements are discretionary, and consulting HMRC’s AEOI guidance without delay.
These changes may have arrived quietly, but the risk of overlooking them is significant, and the window to act is already narrowing.
If you require help with this issue, please contact our team.
Further reading and useful links:
