Articles

Key Changes Introduced By The Charities Act 2022

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By Lucy Gill, Anna Phillips

23 Sep 2022 | 1 minute read

Part 1 of 3: Autumn 2022

The Charities Act 2022 will amend the Charities Act 2011 over the course of three tranches of changes being introduced in Autumn 2022, Spring 2023 and Autumn 2023.

Upcoming changes: Tranche 1

The changes being introduced in the Autumn 2022 tranche will broadly include the following areas of legislation

Paying trustees for providing goods to the charity

The statutory power for trustees to be paid for services rendered beyond the usual trustee’s duties will now extend to goods provided.

Making moral ('ex gratia') payments from charity funds

A framework for making ex gratia payments to individuals has been set out allowing sums up to £20,000 to be paid depending on the size of the charity’s gross income.  The decision to make such payments can now also be delegated by the trustees to certain individuals.

Fundraising appeals that do not raise enough or raise too much

The new legislation aims to reduce the complexity surrounding what trustees are required to do in these circumstances (including a reduced timeframe and a simpler process for obtaining authority).

Power to amend royal charters

Relevant charities will be able to change sections of their Royal Charter, which they currently are unable to, if approved by the Privy Council.

Commissioner's scheme making powers

The new legislation will confirm that the Commission’s scheme-making powers include schemes for charitable companies.

Conferral of trust corporation status

Trust corporation status will be automatically conferred on existing and future corporate charities in respect of any charitable trust of which the corporation is (or becomes) a trustee.

Public notice requirements

A general update to these provisions is being rolled out.

Parliamentary scheme for changes to governing documents

Now when charities update their governing document by parliamentary scheme, the scheme will by default always be under a lighter touch parliamentary process.

Future changes: Tranches 2 & 3

We can expect to see the following broader changes come in to force over the course of the next year across the second and third tranches:

  • Changes to how charities sell, lease or transfer land (Spring 2023).
  • Greater flexibility to make use of 'permanent endowments' (i.e. money or property originally meant to be held by a charity forever (Spring 2023).
  • Changes to how charities can amend their governing documents (Autumn 2023).
  • The overarching theme of the changes being made is one of simplification and reduction of procedural barriers which are intended to allow charities to enjoy increased autonomy for smaller actions, with less direct involvement from the Charity Commission. 
  • The changes also aim to provide clarity, reduce grey areas and close some loopholes created by the 2011 Act. 
  • The changes are broadly welcomed by the sector and the greater freedom and range of powers introduced by new legislation should also help to alleviate some of the residual burdens faced by charities as a result of the Pandemic, however, there is some concern amongst legacy professionals that some of the changes in relation to disposal of property could (without further amendment) erode the tools open to charities to ensure the full values are achieved for properties left to them as legacies.  
  • We will provide further insight and commentary on these changes as they approach. 

In the meantime, a detailed timetable of the planned implementation of the Charities Act 2022 can be found here.

If you have any specific queries that you require assistance with in connection with the above changes, please reach out to the team on the contact details below

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