May 2023

Charities Act 2022

Changes that came into force on 31 October 2022

The Charities Act 2022 received Royal Assent on 24th February 2022.

The Act amends the older version from 2011 and is implemented in stages starting last autumn and rolling through 2023. Some changes came into force last Autumn, some are due to be introduced this Spring 2023 and the final set of changes will come into effect in Autumn 2023.

DCMS (the Department for Digital, Culture, Media and Sport), in conjunction with The Charities Commission, will lead the implementation.

So what has already changed- some changes that came into force on 31 October 2022:

Allowing charities the power to pay trustees for providing goods to the charity

Currently, under certain circumstances, a trustee may be paid for providing services (including associated goods). These could include computer consultancy services, estate agency fees or painting and decorating. Under the new provisions it would also be possible to pay a trustee for providing goods such as stationery.

Making a moral or ‘ex gratia’ payment from charity funds

Charity trustees occasionally receive a request to make a moral or ‘ex gratia’ payment from the charity funds or property or to waive their right to receive funds or property. This happens most frequently where there is evidence that a donor of a legacy had changed their minds since drawing up their will.

Currently the trustees would need to apply to the Charity Commission for permission to proceed. Under the new regulations it will be possible for the charity to make a payment subject to the thresholds below.

  • Charity gross income up to £25,000 with the maximum individual payment is £1,000
  • Charity gross income between £25,001 and £250,000 with the maximum individual payment is £2,500
  • Charity gross income between £250,001 and £1m with the maximum individual payment is £10,000
  • Charity gross income over £1m with the maximum individual payment is £20,000
  • If the payment exceeds £20,000, application must be made to the Charity Commission.

Fundraising appeals that do not raise enough or raise too much money

The changes in the Act will reduce the complexity for dealing with the situation where an appeal fails to raise the amount required to deliver the aim, or there is an excess of funds raised and the charity cannot use them.

Publications from the Government summarise these as:

  • the current requirement in some circumstances for charities to wait six months for donors to ask for a refund will no longer apply
  • there will be a simpler process for obtaining our authority; this will replace the need for the Commission to make a scheme
  • if the donations can be spent on new purposes (different to the purposes you raised them for) are less than £1000, trustees can act without the Commission’s involvement if they comply with the new legal requirements

Power to amend Royal Charters

Charities with Royal Charters will be able to change sections in their Charter which they cannot currently change. Any change would need to be approved by the Privy Council.

We will be updating this article with the changes which will be implemented during 2023.

More information is available from this link to Government Website.

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