Trust compliance update: new HMRC mandatory registration rules

Amendments made to the International Tax Compliance Regulations 2025 have resulted in a new mandatory registration requirement for trusts that are defined as “financial institutions” (FI) or “trustee-documented trusts” (TDT) for international tax information exchange purposes, with existing affected trusts being required to register with HM Revenue & Customs (HMRC) by 31 December 2025.

The purpose of these new rules is to provide HMRC with a greater source of information on trusts (and other entities) that hold financial assets. This is so that relevant information can be shared with other international tax authorities in cases where a person associated with the trust has a tax liability in another jurisdiction. The UK’s legislation in this area derives from the OECD’s “Common Reporting Standard” rules (CRS) and the US’s “Foreign Account Tax Compliance Act” (FATCA).

Very broadly, a trust is a ” financial institution” for these purposes if it holds financial assets (for example, an investment portfolio) and these are professionally managed, or the trust has a corporate trustee. There are exemptions that mean an FI trust can be classified as “non-reporting” but these are narrow and the vast majority of FI trusts will be within scope of these new rules. A trust is “trustee documented” if it has a “reporting FI” as a trustee (such as a corporate trustee) and that trustee reports on behalf of the trusts it manages.

Previously, registration for trusts that are FIs or TDTs was necessary only in circumstances where the trust had a “reportable person” which, very broadly, meant a beneficiary, trustee or settlor who was tax-resident in another jurisdiction. The recent updates made to the regulations now require all FIs and TDTs to register with HMRC’s “automatic exchange of information” (AEOI) service irrespective of whether they have reportable persons to declare or not.

The amendments significantly expand the number of entities captured by AEOI registration requirements and now impose new registration requirements on trusts with corporate trustees. The updates provide HMRC with increased oversight and awareness of FIs and TDTs, and also enhances their ability to monitor the reporting duties required of their trustees.

Registration deadlines

The deadlines for registering for the AEOI service in line with the above amendments are as follows:

• 31 December 2025; or
• 31 January after the end of the calendar year in which the entity first qualifies as an FI or TDT under the CRS or FATCA.

The registration is a one-off requirement and will remain active until the entity deregisters for the AEOI service. Any entities already registered with the AEOI service do not need to take any action following these changes.

Penalties

There are significant penalties in place for those entities that fail to meet the required reporting deadline. An initial penalty of £1,000 may be levied for failure to comply with the notification requirements.

There are further penalties of up to £300 per day if an entity continues to fail to comply after an initial penalty notice has been issued.

How we can help

The Private Client team can help trustees navigate these changes and can assist with analysing the reporting and compliance obligations for trusts under the FATCA/CRS regimes. For support with this, please contact a member of the Private Client Team.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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   • Nick Mendoza

   • Partner
   • Private Client

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   • Sam Sharman

   • Tax & Trust Assistant
   • Offshore & International

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