Charities Act 2022 receives royal assent in the UK

Article 19 April 2022 Experience

We have previously covered the long passage of the Charites Bill which has received royal assent, coming into law as the Charities Act 2022. The Act aims to remove unnecessary red tape for charities and allow for increased flexibility on putting charity resources to good use.

Key changes

The Charities Act makes it easier for governing documents and Royal Charters to be amended (although some exceptions will still require Privy Council or Charity Commission consent). In certain cases, charities can also now rely on statutory powers even where they are not expressly included in their governing document, such as the new power for trustees to be paid for goods they provide to their charity without obtaining Charity Commission consent.

Charities will also have much more flexibility to access and reallocate funds: up to 25% of the value of their permanent endowment fund can now be borrowed without Commission approval and, unless donors specify otherwise at the time of making the gift, donations of under £120 made to a specific appeal no longer need the donor’s consent to be reallocated to similar charitable purposes.

The statutory regime where a charity disposes of an interest in land has also been streamlined under the new Act. The widening of the rules on who can provide advice to charities on the disposal of land coupled with loosening of some of the requirements on section 117 and 119 reports aims to reduce costs and the compliance burden.

There are also important changes in the rules relating to ex gratia payments. Under the Act small ex gratia payments can now be made without the need for prior authorisation from the Charity Commission. The value of these permitted payments will be calculated by reference to the charity’s gross income and authorisation of such payments can now be delegated by Trustees provided appropriate safeguards are put in place.

What happens next

Although the Act is now law, the changes will come into force at different points over the course of the next 18 months, as set out in an indicative timetable provided by the Department of Digital, Culture, Media and Sport. Implementation has currently been grouped into three tranches, with planned deadlines for changes coming into force set as Autumn 2022, Spring 2023 and Autumn 2023. The first tranche of provisions that are expected to come into force by Autumn 2022 includes the power to amend Royal Charters (section 4), cy-près powers (sections 6 and 7), ex gratia payments (sections 15 and 16) and remuneration of charity trustees providing goods or services to a charity (section 30).

As provisions come into force, guidance will be updated online and, as ever, we will provide updates as the implementation progresses.

The Act and accompanying guidance notes can be found here.

Contact