What’s Changing: International Tax Compliance Regulations 2025
HMRC has enacted the International Tax Compliance (Amendment) Regulations 2025, which came into force on 24 June 2025 (with many provisions effective from 1 January 2026). The changes incorporate the OECD’s 2023 updates to the Common Reporting Standard (CRS) and FATCA, and expand the obligations on financial institutions and trustee-documented trusts. (legislation.gov.uk)
Key requirements include:
- Mandatory registration with HMRC’s AEOI service for all Reporting Financial Institutions and Trustee-Documented Trusts. Registration deadline: 31 December 2025 (or 31 January following the first relevant calendar year), depending on entity type. (gov.uk)
- Revised due diligence entries: entities must apply CRS and FATCA rules under the updated OECD-2023 standards, including for crypto assets under CARF, where applicable. (rsmus.com)
- Stronger penalties: for failures in registration, late or missing reporting, invalid self-certification, or insufficient recordkeeping. Penalty amounts may escalate daily for recurring breaches. (rsmus.com)
Who Needs to Prepare and When
- Financial institutions, banks, investment firms, crypto-asset service providers, and trustee-documented trusts.
- Important deadlines: registration by 31 December 2025 for many entities. Full reporting obligations begin with the CY2026 year.
Compliance Best Practices
- Audit existing structures: ensure trusts or financial entities are correctly classified under Reporting Financial Institutions or Trustee-Documented Trusts.
- Review due diligence policies: update internal policies to reference the 2023 OECD CRS and CARF standard.
- Train staff: to understand self-certification, AML/KYC procedures, and recording/reporting duties.
- Set up compliance calendar keeping track of registration deadlines, report submission dates, and record-retention requirements.
Examples of Exposure
- A UK crypto exchange not previously registered: failure to register by the deadline could lead to significant penalties per user/customer.
- A trust holding foreign-situs property: must ensure correct categorisation and reporting under new rules; missteps could cause both legal and tax exposure.
Actionable Insights
- Register early, verify that status under HMRC definitions is correct.
- Document transactions and KYC, especially cross-border ones.
- Seek professional advice if dealing in private trusts or crypto-assets, where mixed compliance and reporting regimes intersect.
Compliance failures here carry reputation and financial risk. Getting ahead ensures that entities meet obligations smoothly and avoid penalties.