Automatic Exchange of Information (AEOI) is a regulatory requirement that often operates in the background but has a direct influence on how investment platforms manage accounts. In this next article from Quilter, they look at what AEOI is and, what is required.
Understanding these obligations and in particular the information that must be disclosed by your clients will avoid delays and misunderstandings surrounding reporting when you interact with product providers such as investment platforms.
What is AEOI and why does it matter?
Automatic Exchange of Information (AEOI) is a regulatory framework designed to combat tax evasion by enabling tax authorities to exchange information about financial accounts held by individuals and entities outside their country of tax residence.
AEOI comprises:
- FATCA – US‑led regime targeting US citizens and tax residents
- CRS (Common Reporting Standard) – a global framework developed by the OECD
The UK participates in both regimes and requires financial institutions including platforms to identify and report relevant accounts to HMRC, which then shares the information with overseas tax authorities.
Understanding these obligations and in particular the information that must be disclosed by your clients will avoid delays and misunderstandings surrounding reporting when you interact with product providers such as investment platforms.
What obligations do an investment platform have?
A platform must:
- Obtain a self‑certification (tax declaration) from account holders
- Identify whether accounts are reportable
- Submit an annual report to HMRC detailing reportable accounts
When is a Tax Declaration Required?
A tax declaration is required:
- On opening a new account
- Following a change in circumstances (e.g. change of tax residency)
- On transfer or assignment (e.g. bond assignment, trust changes)
- Where the platform holds evidence suggesting an existing declaration may be incorrect or outdated
What type of accounts are reportable?
In addition to deposit accounts including current accounts and savings accounts, General investment Accounts providing access to unit trusts, OEICs and ETFs are in scope as well as custody accounts providing access to shares and bonds.
In addition, investment-based insurance contracts such as Investment Bonds are within scope.
Although this will cover the majority of products you encounter this is not an exhaustive list.
The main exclusions include tax efficient accounts such as
- ISA &, JISA
- Registered pension schemes
What information must be disclosed?
For individuals investing, the key information will include:
- Tax residency (including dual tax residency)
- Nationality
- Tax Identification Number (TIN) must be captured.
This enables an investment platform to establish whether an individual is reportable, and to meet its legal reporting obligations to HMRC. Without it, platforms may be unable to process transactions or accept new business.
When the individual is reportable:
- A tax resident of a participating country other than or in addition to the UK
- A US citizen, regardless of residence
For entities the key information is dependent on the classification of the entity type.
Key types include:
Financial Institutions (FI)
- Reporting FI (must register with HMRC/IRS and hold a Global Intermediary Identity Number or GIIN)
- Non‑Reporting FI (e.g. UK registered pension schemes)
Non‑Financial Entities (NFE)
- Active NFE (ANFE) – trading companies, charities, clubs
- Passive NFE (PNFE) – investment companies, most family trusts
For FI’s, the tax declaration must include the disclosure of the GIIN where the entity is a reporting FI or a declaration to confirm they’re exempt from reporting.
For ANFEs a declaration declaring this is sufficient however PNFEs are required to list controlling persons. This includes non-professionally managed trusts and non-trading/investment companies.
Who is considered a controlling person?
- For trusts: settlor(s), trustees, protector(s), beneficiaries (including classes of beneficiaries)
- For companies: directors and shareholders with ≥25% ownership or voting rights
The same information as individuals is required for each controlling person i.e. tax residency nationality and TIN.
Where any controlling person is tax resident of a participating country other than or in addition to the UK or a US citizen then they are reportable.
What causes delays in processing transactions?
The following can lead to incorrect reporting, delays, or account restrictions:
- Missing or outdated self‑certifications
- Incorrect entity classifications
- Failure to identify all controlling persons
- Incomplete or incorrect TINs
Robust checks at onboarding, reviews, and change of circumstance are essential to ensure these delays and restrictions are avoided.
For more information on AEOI including the Quilter products which are in scope please read our guide – 21463-a-guide-to-automatic-exchange-of-Information.pdf
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