UK trusts swept into expanding global tax crackdown as new reporting rules bite

The UK’s trust sector is facing a significant escalation in reporting obligations as new international transparency rules come into force, drawing many previously unaffected structures into the regulatory net for the first time.

The changes, driven by updated global standards on tax transparency, require a wider range of trusts to register under the Common Reporting Standard (CRS). Industry advisers warn that the shift has arrived with little fanfare but substantial consequences for trustees and their advisers.

Acronym‑heavy regime reflects long enforcement trend

The growing list of compliance acronyms ­– TRS, CRS, FATCA, AEOI – reflects a decades‑long shift toward more coordinated global action against tax evasion.

Historic enforcement once relied on physical inspections, such as those associated with the English window tax between 1696 and 1851. By the late 20th century, international cooperation had strengthened, marked by the OECD’s first recommendation on tax avoidance and evasion in 1977.

The 2000s brought more robust domestic and international measures. The UK introduced the Disclosure of Tax Avoidance Schemes (DOTAS) regime in 2004, followed by HMRC’s Connect data‑matching system in 2010. The General Anti‑Abuse Rule (GAAR) came into effect in 2013, and the G20‑backed Base Erosion and Profit Shifting (BEPS) project began the same year. In August 2025, HMRC launched its first corporate prosecution under the ‘failure to prevent the facilitation of tax evasion’ offence.

Trusts drawn into expanded CRS requirements

Trusts have become the latest target of the transparency drive. Under the International Tax Compliance (Amendment) Regulations 2025, registration obligations have widened sharply. Trusts must now register for CRS even if they have no reportable accounts – a change designed to give HMRC a full view of the UK’s trust population.

The update coincides with the introduction of CRS 2.0 from 1 January 2026, extending reporting to electronic money products and crypto‑assets under the new Crypto‑Asset Reporting Framework (CARF). The reforms bring UK rules in line with updated OECD and EU standards and facilitate data‑sharing with more than 100 jurisdictions.

Key deadlines and penalties

Trusts classified as Reporting Financial Institutions (RFIs) or Trustee‑Documented Trusts (TDTs) in 2025 faced a registration deadline of 31 December 2025. Going forward:

• Newly in‑scope entities must register by 31 January following the year in which they become reportable.
• Registration for HMRC’s Automatic Exchange of Information (AEOI) service remains a one‑off requirement, though ongoing reporting may still apply.
• Penalties for failure to register begin at £1,000, with daily fines of £300 for continued non‑compliance.

HMRC has indicated it will adopt a ‘reasonable approach’ toward those who missed the initial 2025 deadline but take steps to comply early in 2026.

A trust is typically in scope if more than 50% of its income comes from financial assets, if its investments are professionally managed or if it has a corporate trustee that is itself classified as a financial institution. These requirements are separate from those of the UK Trust Registration Service (TRS).

Trustees must also prepare for the next major deadline: AEOI returns for the 2026 reporting year are due by 31 May 2026.

Embrace the acronyms – or risk the regulator’s wrath

The pace and breadth of change have surprised much of the advisory community, and HMRC shows little inclination to indulge those slow to adapt. The message is increasingly clear: the age of casual compliance is over.

For better or worse, mastering this new acronym‑laden vocabulary is no longer optional. It is now part of the professional vernacular. Failure to speak the language risks not only confusion but tangible regulatory consequences. In this environment, embracing the alphabet soup may be the only way to avoid drowning in it.

Peter Shand is a partner at MBM and is ranked in the current edition of Chambers High Net Worth Guide as well as being a Leading Partner in the current The Legal 500 UK. Dual qualified in Scottish and English law, Peter Shand heads up the firm’s Trust Practice, which handles one of the largest portfolios of private and charitable trusts in Scotland.