Automatic Exchange of Information (AEoI)

What is the Automatic Exchange of Information (AEoI)?

Since 2016 the Automatic Exchange of Information agreements have been in place  between the UK and other countries. These agreements allow the exchange of information between tax authorities of different countries to help stop tax avoidance and evasion. Each country requires its own financial institutions to report on deposit accounts which are held by a tax resident of a foreign participating country. For example, if a resident of Germany has a savings account in the UK with HSBC, HSBC will report information on that account to the HM Revenue & Customs who will then share the information with their German counterparts. The information includes details about financial accounts and investments. A list of the countries who have agreed to share financial account information can be found here.

Financial institutions, for example, banks, building societies, credit unions, insurance companies or investment companies, will provide information on non-UK residents with financial accounts and investments in the UK to HMRC. Under the International Tax Compliance Regulations 2015 credit unions may be required to submit a return to HMRC containing details of any HMRC will then share this information with the relevant countries.

HMRC also receive information from other countries about UK residents with financial accounts and investments overseas.

The UK has Automatic Exchange of Information agreements to exchange financial account information under 2 regimes.

• • United States Foreign Account Tax Compliance Act (FATCA) – This agreement between the UK and USA requires UK financial institutions to report to HMRC on US customers that hold accounts with them. Or individuals who are expected to pay US tax even while still residing in the UK.

• • Common Reporting Standard – The Organisation for Economic Cooperation and Development (OECD) standard for automatic exchange of financial account information.

There are 4 categories of Financial Institutions common to both the FATCA and CRS agreements:

• • • • • • Custodial Institution
          • Depository Institution
          • Investment Entity
          • Specified Insurance Company

Depository institutions are defined as “entities regulated in the UK as a savings or commercial bank, credit union, industrial and provident societies and building societies.”

Action Required By Credit Unions: International Tax Compliance Regulations were amended in July this year to implement the OECD’s 2023 update to the CRS (known as CRS2.0) from 1 January 2026.  The amended regulations also introduce a mandatory registration requirement for Reporting Financial Institutions and Trustee-Documented Trusts with a registration deadline of 31 December 2025. Details on how to register can be found at the bottom of this guide under “How to Submit your Return”.

If you have any question on this process please do not hesitate to reach out any of the ABCUL team who will be happy to provide support.  

What does this mean for credit unions?

AEoI agreements mean that financial institutions like credit unions must review the accounts they maintain and report certain account holders to HMRC every year.

The FATCA Intergovernmental Agreement with the USA allows for certain thresholds below which a Financial Institution is not required to review, identify or report accounts to HMRC, thus removing the accounts from the need to carry out due diligence. With the exception of pre-existing entity accounts, these thresholds do not apply to reporting under the Common Reporting Standard. 

FATCA – Account thresholds and exemptions 

1. Individual Depository Accounts

 2.Entity Accounts

  CRS – Account Thresholds 

1. Individual Accounts

2. Entity Accounts

The information for assessing high-value accounts is contained within the regulations; please contact ABCUL if you require further assistance. 

If you have no accounts to report you will not normally need to submit a nil return.

Possible Exemption from FATCA 

Under Annex II of the UK/US FATCA Agreement, a Credit Union can be a Non-Reporting Financial Institution provided that it meets the criteria set out in Annex II, II B(2). There are 10 criteria that must be met before a Financial Institution can be treated as a Local Client Base Financial Institution. The credit union should self-assess whether it meets these criteria and maintain appropriate records to support its self-assessment. The criteria are:

1. You must be licensed and regulated under the laws of the UK.
2. The firm must have no fixed place of business outside the UK
3. The firm must not solicit potential account holders outside the UK
4. The firms is required to identify whether account holders are residents of the UK as part of the AML/KYC procedures
5. At least 98 per cent of your accounts by value are held by people who reside in the UK or another member state of the EU. The 98 per cent threshold can include the accounts of US persons if they are resident within the UK. The credit union will need to assess whether it meets this criteria annually. The measurement can be taken at any point of the preceding calendar year for it to apply to the following year, as long as the measurement date remains the same from year to year.
6. Beginning on the 1 July 2024, the firm does not provide financial accounts to – any specified person who is not a resident of the UK (including a US person that was a resident of the UK when the account was opened, but subsequently ceases to be a resident of the UK).
7. On or before 1 July 2014, the firm implemented policies and procedures to establish and monitor whether it provides accounts to any non-UK tax resident.
8. The firm reviews those accounts (non-UK residents) in accordance with the procedures appliable to pre-existing accounts to identify any US Reportable Account. Where such accounts are identified, they must be closed, or transferred to a participating Foreign Financial Institution.
9. Each related entity of the firm, where the related entity is itself a Financial Institution must be incorporated or organised in the UK and must also meet the requirements for a Local Client Base Financial Institution.
10. The Financial Institution must not have policies or practices that discriminate against opening or maintaining accounts for individuals who are Specified US Persons and who are residents of the UK.

To support any credit unions who meet the criteria above for FATCA exemption we have created a template form that can be submitted to HMRC.

Note: Where a Local Client Base Financial Institution provides financial accounts to US citizens who are resident in the UK, these financial accounts do not need to be reported to HMRC unless the Account Holder subsequently ceases to be a resident of the UK.

However, there is no similar exemption under the CRS.  A Credit Union will generally be a Reporting Financial Institution for CRS purposes, i.e. it will have due diligence obligations under the CRS even if, following that due diligence, it has no reportable accounts.

A credit union cannot qualify as a Non-Reporting Financial Institution for CRS, because it cannot meet the criteria under the CRS Section VIII, B.1(c) to be an “Entity that presents a low risk of being used to evade tax…and is defined in domestic law as a Non-Reporting Financial Institution…”.  The UK has not defined Credit Unions as a type of Non-Reporting Financial Institution for CRS purposes under domestic law.

Capturing Member Information

Each year HMRC undertakes compliance checks, and may write to the credit union to ensure that reporting obligations have been fulfilled. We have included a copy of such letter here.

Many credit unions already capture this information at the point of joining as part of their application process. This information is then recorded on the members account and can be pulled into a report annually to complete the submission to HMRC.

What can I do if my credit union has not been capturing this information?

We would encourage all credit unions who have not been capturing this information to obtain self-certification from their members and embed this into their joining process moving forward.

A self-certification can be collected and completed in any medium face-to-face, online, or by telephone. There is no prescribed format for a self-certification, but it may, for example, form part of the new member joining application form. Whatever form it takes, it must allow the Reporting Financial Institution to determine the Account Holder’s Residence (s) for tax purposes and whether they are a US citizen, and it must also include the Account Holder’s tax identification number and, except for FACTA, date of birth.

The self-certification must also be signed by the account holder (or a person authorised to do so for the individual under domestic law), or in the case of an account opened by telephone or online the self-certification must be positively affirmed – that is, the Account Holder must confirm the information provided. A self-certification is required for all accounts, including those held in the names of minors.

Information required:

• • name;
  • residence address;
  • jurisdiction(s) of tax residence
  • Tax Information Number with respect to each Reportable Jurisdiction (the option must be available for multiple jurisdictions)
  • date of birth
  • Unambiguous affirmation of the information (e.g. signature, tickbox on an online form, verbal confirmation recorded over phone) 

E-mail Self Certification Template

ABCUL have provided an editable MS Word document email template for member self-certification here

How to submit your return

To submit your return, you need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you submit your return.

You will also need to be registered for the Automatic Exchange of Information online service.

You need to register by 31 December 2025 or 31 January following the calendar year in which you become a Reporting Financial Institution.

What you will need to complete registration:

• • your Government Gateway ID and password
  • organisation name
  • first and last name (your name or the name of the contact person at your credit union)
  • contact telephone number
  • email address
  • contact address
  • organisations name
  • telephone number
  • email address
  • Global Intermediary Identification Number (GIIN) if reporting under the Foreign Account Tax Payer Compliance Act (FACTA) for the USA
  • Unique Taxpayer Reference (UTR), National Insurance number or indicate that the Reporting Financial Institution has no UK tax identifier
  • Address of the credit union

After you have registered you will be given an:

• AEOI ID (10 digit reference)
• HMRC Registration Identification Number

These are the 2 reference numbers you will need to submit a return.

When you can file a report:

Once you’ve registered and enrolled to use the HMRC AEOI (including FACTA) service you will need to wait approximately 24 hours to file your report.

Notifying members of reporting 

A reporting firm must notify each individual reportable person that information relating to that person will be reported to HMRC and may be transferred to the government of another territory in accordance with a relevant agreement. 

The notification must be made by 31st January in the calendar year following the first year in which the account held by the individual is a reportable account maintained by the reporting financial institution. 

N.B. HMRC state that firms can notify customers wholesale through the terms and conditions of the account. 

Horizon Scanning: Future changes

From 1 January 2027

You’ll need to report CRS and FATCA separately. HMRC’s combined CRS and FATCA schema will no longer be in use after 31 December 2026.

It will be replaced by the:

• amended CRS Extensible Markup Language (XML) schema published by the Organisation for Economic Co-operation and Development (OECD) in October 2024, for CRS reporting
• Internal Revenue Service (IRS) FATCA schema published in January 2017, for FATCA reporting

From 1 January 2027, all XML submissions to HMRC will need to be on the amended CRS or FATCA schema respectively, including submissions relating to previous calendar years. More details on these submissions can be found here.

Conclusion 

Only a minority of credit unions should have to report information to HMRC, however, all credit unions are required to obtain self-certification to establish account holder’s tax residency status on account opening.  

If you have any questions or feedback on this information guide please contact your MRM by emailing them direct or at members@abcul.org or dialing 0161 832 3694.