Why Trusts and Investment Structures Need to Act Now

If you have a family trust, family investment company (FIC) or investment partnership with a professional manager, you may now need to register with HMRC under the Automatic Exchange of Information (AEOI) regime – even if there is nothing to report.

The deadline was 31 December 2025. If you have not yet registered, you should act now.

 

What is AEOI?

AEOI is part of a global framework to improve tax transparency. UK financial institutions collect details about their account holders’ tax residency and report them to HMRC annually. HMRC then exchanges that information with tax authorities overseas – and receives equivalent data back about UK tax residents holding accounts abroad.

The two main frameworks are FATCA (covering the United States) and the Common Reporting Standard (CRS), which covers over 100 countries. The aim is to ensure that offshore income and financial arrangements are properly disclosed across borders.

 

Does this affect you?

The rules were significantly updated in July 2025. The changes brought many structures within scope for the first time – including many that have never had anything to report.

Structure	In scope?
Family trust with a discretionary fund manager or wealth manager	Yes
Trust with a professional corporate trustee who is a regulated trust company	Yes
Family investment company (FIC) where a professional manager runs the portfolio	Yes
Investment partnership with a professional discretionary manager	Yes
Self-managed trust or company where trustees/directors make all investment decisions	Probably not, but see the FIC note below

 

The key test for trusts and companies is whether a regulated firm manages the assets on a discretionary basis. If your trustees or directors make their own investment decisions, the structure is less likely to be caught.

 

Family investment companies – a note on third-party reporting

Even if a self-managed FIC does not need to register, its shareholders may still be reported by third parties.

Banks and investment platforms holding accounts in a company’s name are require to identify anyone controlling more than 25% of the shares or voting rights. If those individuals are tax-resident in a CRS participating jurisdiction, the bank reports them to HMRC – regardless of whether the company itself is on the AEOI register.

This is worth bearing in mind if family members have emigrated or have dual residency. The FIC may have no direct filing obligations, but relevant shareholders will still appear in HMRC’s data.

 

TRS and AEOI are different – this is the most common misconception

Many trustees and their advisers assume that being registered with HMRC’s Trust Registration Service (TRS) means AEOI is covered. It does not.

TRS registration does not satisfy AEOI obligations.

TRS is a separate register, introduced under anti-money laundering rules. Most UK trusts must complete TRS, and doing so gives the trust a UTR. That process has nothing to do with AEOI.

AEOI is a separate obligation under the International Tax Compliance Regulations. It requires a different process, through a different section of the Government Gateway, and applies only to structures that qualify as Financial Institutions under AEOI rules.

If your trust has completed TRS but has never been reviewed under AEOI, that review is overdue.

 

Registration does not mean annual reporting

This is the most important point for many clients.

Being on the AEOI register is a one-off, mandatory step. It does not mean you have to file returns every year.

Most family trusts and FICs with UK-resident beneficiaries and shareholders will complete registration but never need to file a return. Annual returns are only required where the structure has account holders who are tax-resident outside the UK, or who are US citizens or tax residents. If all your beneficial owners and beneficiaries are UK-resident, you complete registration once and that is broadly the end of your active obligations – for now. That changes the moment any beneficiary or beneficial owner moves abroad.

 

What you need to do

If you have not yet registered: Complete AEOI registration through HMRC’s Government Gateway as soon as possible. HMRC has confirmed that penalties will not be charged automatically where there is a reasonable excuse and registration happens promptly.

If you are already registered: Check your annual return position. If all beneficial owners are UK-resident, you do not need to file. If any have moved abroad, a return is due by 31 May for the preceding calendar year.

In all cases: Carry out and document due diligence – checking the tax residency of all account holders each year. That obligation applies whether or not you file a return.

 

Penalties

The potential penalties are significant, but not automatic.

Failure	Maximum penalty
Failure to register	Up to £1,000 + up to £300 per day
Late or missing annual return	Up to £5,000 + up to £600 per day
Inaccurate or incomplete return	Up to £100 per account holder
Failure to apply due diligence	Up to £100-£300 per account holder
Failure to keep records	Up to £5,000 per year

 

HMRC takes frequency of failure into account. A first failure with reasonable excuse is unlikely to attract the maximum.

 

Read the full guide

We’ve put together a detailed guide covering the full scope of the AEOI rules – the managed investment entity test, excluded accounts, the trust classification decision tree, the penalties framework, CRS 2.0 changes and how trusts with a corporate trustee are reported differently under CRS and FATCA.

Find the guide here.

If you would like us to review your structure or handle the registration, please get in touch.

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This information sheet is for general guidance only – action should not be taken without specific advice. Should you require further information or have any questions please get in touch with your usual Sopher + Co adviser or contact enquiries@sopherco.com.