Charities Act implementation update – June 2023

As previously covered in our updates, you’ll be aware that the Charities Act 2022 is being implemented in stages. In the next stage, the following provisions were brought into force on 14 June 2023:

Land and property

• broadening the range of acceptable individuals who can provide trustees with the required advice on land and property disposals. For example, in addition to qualified surveyors who are members of the Royal Institute of Chartered Surveyors (RICS), some estate agents, who are fellows of the National Association of Estate Agents, and fellows of the Central Association for Agricultural Valuers (CAAV) can now also advise the trustees whether the terms of the transaction are appropriate.
• confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements (so they are not disqualified from exercising their professional expertise).
• giving trustees discretion to decide how to advertise a proposed disposal of charity land.
• freeing charities from a requirement to get authorisation from the Commission before enabling a charity employee to live in charity property on a short periodic or fixed term tenancy. This could be a relief to, for example, churches, which might have property they rent out to staff rather than provide accommodation free of charge (particularly where they cannot meet the requirements to justify providing the accommodation tax-free because it is essential for the employee to do his/her job).

Permanent endowments

• authority for charities to spend from permanent endowments of £25,000 or less without permission from the Charity Commission (in certain circumstances). Normally, permanent endowment funds may not be spent. Some charities will also be able to borrow up to 25% of their permanent endowment funds with specific authority from the Commission.
• further to other recent developments in charity investment case law, allowing charities that have chosen a “total return approach” to investment to use permanent endowment to make social investments with a negative or uncertain financial return, as long as any losses are offset by other gains.

Charity names

• the Commission having additional powers to direct a charity to change any working names that may be similar to other charities’ names, or names which are misleading (their existing power only covered charities’ official names). They may also delay registration of a charity with an unsuitable name.

Some provisions that were expected to come into force during this round have been deferred to the end of 2023, to do with disposals and mortgages by liquidators, mortgagees and administrators, and the wording to be included in statements and certificates for disposals and mortgages.

Keep an eye out for further announcements, but the next stage (currently given as “by the end of 2023”) covers updates to:

• Charity constitutions;
• Powers relating to appointments of trustees;
• Remuneration of charity trustees etc; and
• Charity mergers

This was previously scheduled for “Autumn 2023”. We’ll let you know when we know more.

Lastly, it’s interesting to note that the Department of Culture, Media and Sport have committed to review the financial thresholds set out in the Charities Act 2011, to see if they should be increased in line with inflation. That might mean higher thresholds for independent examinations, or needing to complete SORP accounts, for example. They aim to start the review this year, but I wouldn’t expect any imminent changes.

More details on the overall shape of the changes in the Charities Act 2022 can be found in our blog: Charities Act 2022 Briefing - Stewardship