Who is affected?
Previously this requirement only applied to trusts with foreign persons connected. It now applies to those with no foreign connections, if the trust is managed by a Financial Institution (FI) or has a FI as a trustee.
An entity will generally be considered a Financial Institution where 50% or more of the entity’s income in the 3 year period ending on 31 December 2024 comes (or the period the entity has been in existence – if shorter) from traded investments and the trust has a discretionary fund manager or a corporate trustee appointed.
Most registered charities are excluded from being a Financial Institution for these purposes.
New Trust registration requirements
The deadline for AEOI registration of existing FI trusts was 31 December 2025 (or 31 January following the calendar year in which a trust qualifies as a Reporting FI).
Failure to register Reporting FIs and Trustee Documented Trusts with HMRC can lead to a penalty of £1,000, followed by £300 for every day after the initial penalty is applied until the trust is registered. However, HMRC has stated that late penalties will not apply if there is a reasonable excuse for the delay in registering.
The registration is a one-off requirement and there is no need to make nil-returns once registered.
New Trust due diligence requirements
Trusts classified as FIs must keep a record of the steps taken to comply, including obtaining self-certification forms from the persons connected to the trust, which can include the settlor(s), trustee(s) and certain beneficiaries.
HMRC can request to review the documentation. Failure to comply with the various due diligence procedures and record keeping rules can result in penalties ranging from £100 to £5,000.
How to register
Trusts that are FIs must complete the one-off registration on HMRC’s AEOI portal and comply with the due diligence rules. Where there are no reportable accounts, nil returns are not required however the one-off registration is mandatory.
A trust’s AEOI status should be monitored, as a change of trust activity or assets can change a trust’s status, which will affect the trust’s responsibilities under the new rules.
Registration can be completed online via HMRC’s website: https://www.gov.uk/guidance/register-for-automatic-exchange-of-information
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