New HMRC rules for trusts
New HMRC rules which mean that trusts that are reporting financial institutions or specified non-reporting financial institutions (known as trustee-documented trusts) needed to register with HMRC for international tax information exchange purposes by 31 December 2025 – or risk a significant penalty.
Registration is a one-off requirement. This is separate from and in addition to registering with the Trust Registration Service (TRS).
Previously, trusts only need to register with HMRC if the trust had a reportable person, i.e. a beneficiary, trustee or settlor, who was tax-resident outside the UK. The new rules now mean that all financial institution trusts and trustee-documented trusts must register with HMRC’s Automatic Exchange of Information (AEOI) service.
A common example is a trust that derives more than 50% of its income from an investment portfolio, where a discretionary investment manager or a corporate trustee (such as a firm’s trustee company) is appointed.
Who needs to register?
- Trusts that are financial institutions but have previously not filed AEOI reports
- Trusts that are financial institutions and AEOI reports have been submitted by the trustee under its own requirements as a reporting financial institution but the trust itself has not previously needed to be registered (i.e. trustee-documented trusts).
For the purpose of AEOI, trusts that are financial institutions, are trusts whose assets are managed by a fund manager or under a discretionary mandate. This encompasses funds under the management of investment advisers, or those managed personally but via an online trading or brokerage platform.
Where more than 50% of the income arising in the trust is from those sources, it would fall within the remit of these reporting requirements.
AEOI registration deadline
The AEOI registration deadline was 31 December 2025 (or 31 January following the end of the calendar year in which the trust first qualifies as a Reporting Financial Institution (FI)).
Penalties for failing to complete the AEOI registration
Failure to register a reporting FI or trustee-documented trust can lead to:
- an initial penalty of £1,000, and then
- £300 per day for each day after the initial penalty until the trust is registered.
How to register
You can register for AEOI here using your Government Gateway user ID and password.
Exemption for qualified non-profit entities
From 1 January 2026, charities that meet the definition of a Qualified Non-Profit Entity are exempt from AEOI registration. Charities that are already registered and meet the criteria can de-register from 1 January 2026.
Enhanced due diligence and record keeping
Trusts classified as FIs must now document the steps taken to comply with AEOI due diligence rules. This includes obtaining and retaining self-certification from relevant people connected to the trust, which may include:
- settlor(s)
- trustee(s)
- certain beneficiaries
HMRC may request these records. Non-compliance with due diligence and record keeping can lead to penalties ranging from £100 to £5,000.
What should trustees be doing now?
If a trust is classified as a financial institution, trustees should:
- Complete the one-off registration on HMRC’s AEOI portal (mandatory).
- Comply with due diligence requirements, including maintaining records.
Where there are no reportable accounts, nil returns are not required – but the one-off registration is still a mandatory requirement.
Finally, trustees should keep the trust’s AEOI classification under review, as changes in activities or assets can shift the classification and, in turn, the trust’s responsibilities, under the new rules.
Need further advice?
For further advice or support on trusts, please get in touch.