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Charity Finance Professionals Community

The Charities Act 2022 – what are the practical implications for you?

Author: Kristina Kopic, Head of Charity and Voluntary Sector, ICAEW

Published: 22 Mar 2022

In February, the Charities Bill received Royal Assent and passed into law as the Charities Act 2022. The recommendations from the Law Commission formed the basis for the provisions of the new legislation and the Act is designed to give trustees more flexibility to manage charities effectively. They will not have a big impact on charities’ daily operations but simplify certain areas of regulation.

The Charity Commission now enters a process of implementing the legislative changes, which it describes as one of its business priorities for 2022. The gradual implementation process is expected to last until autumn 2023 and involves updating Charity Commission guidance, both for trustees and for their own staff. Importantly, the Commission will provide updates when each of the provisions come into force and when revised guidance, or online services, are available to charities.

Elizabeth Jones, Partner at Farrer & Co, will present a webinar on the practical application of the Act on Thursday, 21 April (13:00-14:00) for ICAEW’s Charity Finance Professionals Community. She will explain how the Charities Act 2022 impacts charities and their trustees and will also cover what accountants working in practice need to know to advise their charity clients. Register here for the webinar to find out what you need to know:

Here is a summary of the headlines and what they will mean for your charity:

  1. Amending the charity’s governing document: most charities will be able to amend their governing documents or Royal Charters more easily – remaining subject to the Commission and the Privy Council’s approval in certain circumstances, such as where changes to the charity’s objects are proposed
  2. Access a wider range of professional advisers on the sale of land: charities will have access to a much wider pool of professional advisors on land disposal, and to more straightforward rules on what advice they must receive
  3. Using a permanent endowment more flexibly: most legal restrictions on how charities can use permanent endowments stay in place, but there will be more flexibility in some areas
  4. Paying their trustees for goods in certain circumstances: trustees will be able to be paid for goods provided to a charity in certain circumstances, even if not expressly stated in the charity’s governing document (currently trustees can only be paid for supply of services)
  5. Spend funds raised by failed fundraising appeals: charities will be able to take advantage of simpler and more proportionate rules on failed appeals
  6. More flexibility to make ‘ex gratia’ payments: ‘ex gratia’ payments are currently subject to strict rules which will be relaxed so that certain small ‘ex gratia’ payments will no longer require Charity Commission approval

For more information, please read the Charity Commission’s update Charities Bill: the next steps and click here to access the full Charities Act 2022.