Charities Alert

The Charity Governance Code was updated in October 2025 and a more interactive website is being launched by them in 2026. The Code can be found at: https://www.charitygovernancecode.org/

There are eight universal principles which describes expectations in a charity with 41 outcomes to show that governance is working well. All charities, regardless of size or complexity are expected to follow the principles to achieve the outcomes for each principles. For each principle and outcome there is now:

• a list of behaviours that support the charity’s achievement
• policies, processes and practices
• evidence of good governance section.

The Governance Code encourages charities to publish a brief statement (a short narrative rather than a lengthy ‘audit’ of policies and procedures) in their annual report explaining their use of the Code and we therefore anticipate that you will be including an appropriate comment on this in your Trustees’ Report. 

The Charity Commission has released its latest annual report on public trust in charities. The findings indicate that trust levels have remained stable since 2020, largely driven by the perception of a charity’s aim to do good.

There is a persistent belief that smaller, local charities are more trustworthy than national charities. This is despite the fact that larger charities are subject to more stringent transparency requirements, which are a key factor in building trust. Respondents highlighted that their trust is influenced by how charities ensure that monies reach their intended causes and by visibly demonstrating their charitable activities.

The report, which includes interviews with a diverse range of the public, reveals that only one in five individuals are well-acquainted with the Charity Commission, with increased familiarity with the Commission associated with higher levels of trust. For more details, see the full report here.

Smee & Ford Legacy Trends 2024 reported a record legacy income of £3.5 billion in 2023, marking a 3.2% increase. Charitable estates have also risen to £22.6 billion, a 5.6% increase and 2023 had the highest record of unique charitable legacies for the past decade. The report highlights that there is further growth anticipated from Baby Boomer bequests, with an increase in annual deaths expected to rise to over 730,000 by 2035, translating to 47,000 charitable cases per annum in the years to come.

Additionally, the CAF UK Giving Report 2024 revealed that donations reached £13.9 billion in 2023, up from £12.7 billion in 2022. However, there was a decrease of £800 million in funds directed towards overseas causes. Furthermore, the average monthly donation was £65; 40% higher than 2019 but using the median method, donations remained at £20 per month, unchanged for seven years – using statistics from Pro-Bono Economics, with inflation it should have been £25.

An analysis of the VCSE Barometer carried out by Pro-Bono Economics found that one-third (33%) of charities reported a decline in their finances in the quarter ending July 2024. This is attributed to ongoing workplace challenges and rising demand for services across charities of all sizes. 

For further information on the treatment for the charity sector’s unhealthy status quo, please visit: https://www.probonoeconomics.com/

It is now accepted thinking that the uncertainty of the past few years is here to stay due to global economic uncertainties, geopolitical instability and as a result of rapid technological change.

These continuing challenges signal a new normal which requires all organisations to adapt to survive and thrive. While there have been uncertainties in the past, the level and number have increased, as has the speed with which these will impact an organisation.

For non profit organisations, the ever-present challenge is how they can deliver their mission in times of growing demand amid a squeeze on income and rising costs. It becomes even more imperative for boards and the leadership teams to continue to focus on organisational purpose, impact and culture. Juggling competing priorities often results in a lack of focus on matters related to climate risks or EDI and ESG. It is key that organisations focus on strategy at different time horizons to avoid falling behind the curve.

Further information can be found on our insight Building Resilience.

CC48: Charity Meetings

The CC48 guidance from the Charity Commission, updated July 2024, provides essential rules for charity meetings that must be adhered to. The guidance emphasises the necessity for charities to adhere to their Governing Document rules on planning, running and recording meetings.

The Governing Document must be amended where rules are outdated to ensure decisions made in meetings are valid. For example. CC48 provides specific guidance on updating the Governing Document to allow for virtual and hybrid meetings. It also covers different types of meetings, such as trustee meetings and Annual General Meetings (AGMs), each with their own rules that must be followed.

CC48 can be found here.

CC27: Decision Making for Trustees

The CC27 guidance from the Charity Commission outlines seven principles and best practices for trustees on decision-making.

The seven decision-making principles are:

1. Trustees must act within their powers
2. Trustees must act in good faith
3. Trustees must be sufficiently informed
4. Trustees must take account of all relevant factors
5. Trustees must identify and disregard irrelevant factors
6. Trustees must manage conflicts of interest
7. Trustees must ensure their decision is within the range of decisions that a reasonable trustee body could make.

This guidance provides detail on each principle but particularly when making significant or strategic decisions and how to record the decisions made.

Whilst CC27 applies specifically to all trustees of all charities in England and Wales – whether registered, unregistered or exempt, including corporate charity trustees – the guidance can be useful for other members of the charity to be aware of in considering their decision-making.

CC27 can be found here.

The Fundraising Regulator became responsible for regulating fundraising in the UK in 2016 and therefore took over responsibility for the Code of Fundraising Practice. Since then, the code has been updated several times.

The updated code is designed to help fundraisers in three key areas and includes a list of top tips to help you in charities fundraising activity:

• Documenting your fundraising decisions
• Due diligence and fundraising
• Monitoring fundraising partners

There is a structured transition period (May to November 2025) to help fundraising organisations implement the new code. The code has been shortened and is more principle based. Some instructions for charities which were previously considered as being overly restrictive have been replaced. For example, previously charities were instructed not pay fundraisers “excessive amounts” or by commission. This has been replaced with “give appropriate consideration to the approach you choose for paying fundraisers and whether this fits the values of your charitable institution”.

The Fundraising Regulator has published its latest Annual Complaints Report which presents insights from casework alongside complaints reported by a sample of the UK’s largest fundraising charities. This report analyses data for the period 1 April 2023 to 31 March 2024.

Misleading fundraising and misleading information continue to be the most complained about theme. This is a trend for the past three years in the ‘complaints and a common cause for complaints’ across different types of fundraising. Clear, considered wording in materials and scripts is a useful tool in managing this risk.

The report also highlights that: “Door-to-door fundraising has continued to be one of the more complained about fundraising methods to the regulator and sample charities. Complaints about door-to-door fundraising included concerns that vulnerable members of the public were being targeted; the legitimacy of the door-to-door fundraisers; and the time of day that fundraisers were knocking on doors. Agency use of subcontractors and sub-subcontractors can make it more challenging for charities to retain appropriate oversight and control of compliance with the relevant standards.” The Regulator had 26 self-reports submitted to them in 2023/24, an increase of 37% from the 19 organisations that self-reported in 2022/23. Investigations were opened into two self-reports relating to separate media articles regarding door-to-door fundraising.

While the rules on trustee payments have not changed, the Charity Commission has refined its guidance on paying a trustee (‘CC11’) to make it clearer and better help trustees navigate the law.

CC11 is now split into sections covering paying a trustee or connected person for goods or services, payments for loss of earnings, employing a trustee or a connected person, paying a trustee to carry out trustee duties and other payment types.

Trustee payments

The underlying rules on trustee payments have not changed. The redesigned guidance continues to stress that it must be clearly in the charity’s best interests to pay a trustee (or person connected to them), with all other options having been carefully considered, and the resulting conflict of interest managed. Additionally, a charity must have legal authority to pay. 

The guidance also covers payment for trustee expenses clarifying that these do not constitute trustee ‘payments’ and that trustees are entitled to have their reasonable expenses reimbursed by the charity which includes travel and accommodation costs but may also include costs for things like childcare or adjustments enabling those with disabilities to conduct their role.

You can view the news article here.

The Charity Commission with Pro Bono Economics have carried out a national survey of charity trustees, which while does not have any recommendations does have findings and insights which are valuable to all those interested in charity governance.

Key takeaways from the research are:

• 80% would recommend it to others with many reporting experiencing multiple and profound benefits.
• 94% believe their contributions to board meetings are heard and respected.
• 93% feel valued and supported by fellow members of the board and 91% feel that their contributions are welcomed and respected by staff and volunteers.
• 95% have a strong understanding of their role and responsibilities and feel confident sharing their views in board meetings.
• Older people currently fill most of the Trustee roles and there are still more male than female Trustees, with smaller charities having more female trustees proportionally.
• People from an Asian background, people of mixed ethnicity and other ethnicities are less likely to hold Trustee roles, in comparison with the general population.
• There are proportionally more Trustees in those under 60 who are Black (7% compared to 5% in the population) and proportionally fewer who are Asian (5% compared to 11%).

The majority of Trustees surveyed reported serving on boards of between four and 10 members (74%). Just over one in 10 (12%) Trustees reported being on a board with three members or fewer.

The survey found the majority of the Trustee population have served on their boards for four years or more (55%). 22% have been a member of their board for more than 10 years, with just 36% having been a member of their board for two years or less. 13% were new to their board, having been a member for less than a year.

There is a mixed picture of skills present at the board level, with most Trustees reporting significant skills and experience in service delivery. While many Trustees reported their board had significant finance skills and experience (59%), there is an overall low prevalence of artificial intelligence (AI) skills for the Trustee population (8%).

The 2024 budget, released 30 October, outlines new government’s tax, welfare, and spending priorities up to March 2026, with a framework extending beyond April 2026. It also previews the spring spending review, which will allocate funding for central government departments through to March 2029.

Key announcements for Charities: 

• Local government funding. A 3.2% rise in core local government spending, at least £600 million funding for social care. 
• Support for individuals and carers. Reduced Universal Credit deductions increased Carer’s Allowance earnings limit. 
• VAT and business rates relief for private schools. VAT relief is removed. Business rate relief is for those providing full time education to pupils with education, health, and care plans. 
• SEND Support. £1 billion to support children with special educational needs and disabilities (SEND). 
• Hardship support. £1 billion next year to extend the Household Support Fund and hardship payments. 
• Educational funding. An additional £30 million for free breakfast clubs, £300 million for further education and £40 million for the Growth and Skills Levy for training. 
• Holocaust education. An additional £2 million to support Holocaust education charities. 
• Research and development and inheritance tax reliefs maintained.

Further positive announcements include increased budget for the Charities Commission, additional support for central government departments and public services, and more funding for ‘trailblazer’ programmes and mental health crisis centres.

However, the 6.7% rise in the national living wage and the increase in employer National Insurance contributions (NICs) to 15%, both effective from April 2025, will impose financial pressures for charities. Additionally, the NIC threshold has dropped from £9,100 to £5,000.

From April 2025, many charities that employ staff will see their costs increase, with the average employer expected to incur an extra £26,000 in annual costs (approximately £800 per employee). However, the Employer’s Allowance is set to increase from £5,000 to £10,500 and the threshold for claiming this allowance will be removed, potentially allowing more charities to benefit.

Wholistically, this budget signals a shift in government’s approach to funding local public services. It aims to simplify local government funding.

Update: On 5 June 2025, the Department for Works and Pensions announced that the government will introduce legislation to deal with the issues arising from the Virgin Media v NTL Pension Trustees judgment which has increased uncertainty in the pensions industry. The legislation will “give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards. Scheme obligations will otherwise be unaffected, and the government will continue to maintain its robust framework for the funding of defined benefit pension schemes in order to protect people’s hard-earned pensions.”

Until it was abolished in April 2016, defined benefit pension schemes could contract out of the State schemes. In return for lower employer and employee National Insurance contributions, a scheme was required to meet certain minimum requirements in relation to the benefits provided through the scheme. Before 6 April 1997 a contracted-out salary-related scheme was required to provide each member with a Guaranteed Minimum Pension. The 1995 Pensions Act ended that regime and with effect from 6 April 1997 contracted-out schemes had to satisfy the Reference Scheme Test, which had to be assessed and certified by the scheme actuary that the minimum level of benefits under the reference scheme test would continue to be satisfied after the amendment was made.

On 25 July 2024, the Court of Appeal upheld the High Court’s decision in relation to Virgin Media v NTL Pension Trustees II Limited that the statutory actuarial confirmation was required, and without this, alterations are void. This decision could potentially have a significant impact for other schemes where changes have been made without actuarial confirmation.

The question appealed was whether a confirmation was required for changes to future service benefits or just past service benefits. The Court of Appeal upheld the High Court's decision that confirmation was required for amendments to future accruals, before legislation changes in 2013. Legislation does allow the government to make retrospective regulations to validate amendments that are void due to the absence of such written confirmation. Therefore, depending upon the outcome of any subsequent appeal to the Supreme Court, the industry may call on the government to take action.

On 25 July 2024, the Court of Appeal upheld the High Court’s decision that the statutory actuarial confirmation was required, and without this, alterations are void. The question appealed was whether a confirmation was required for changes to future service benefits or just past service benefits. The Court of Appeal upheld the High Court's decision that confirmation was required for amendments to future accruals, before legislation changes in 2013. Legislation does allow the government to make retrospective regulations to validate amendments that are void due to the absence of such written confirmation. Therefore, depending upon the outcome of any subsequent appeal to the Supreme Court, there is the possibility that DWP may take action to validate scheme rule amendments which would otherwise be invalidated by the principle in the Virgin Media case.

On 29 July 2024 a joint statement was issued a working group formed by the Association of Consulting Actuaries, the Association of Pension Lawyers and the Society of Pension Professionals proposing that the Secretary of State for Work and Pensions make regulations to validate retrospectively any scheme rule amendment affecting reference scheme test benefits, that is held to be invalid solely because a written actuarial confirmation was not received before that amendment was made. If such regulations were to be made, this would provide a fallback position for DB schemes and their sponsoring employers if issues of invalidity of scheme rule amendments were to be raised based on the Virgin Media case. Other industry bodies have also begun lobbying government to make these changes.

In the meantime, scheme actuaries may need to consider whether they need to take account of matters raised through the Virgin Media case and take into account the impact on funding updates and triennial actuarial valuations. To date actuaries have not been explicitly referred to this matter in their actuarial valuations.

From a pension scheme accounting perspective, unless the possibility of settling the contingent liability is remote or it is not material, disclosure should be made in the notes to the financial statements of the estimated financial effect and an indication of the uncertainties relating to the amount or timing. Trustees of pension schemes should assess whether disclosure is required in their accounts.

Employers will also need to consider the impact of the case on their accounts, and this will include retrospective and future liabilities and therefore will be a larger amount. If the amount is not included in actuarial valuations due to lack of information, there will need to be an assessment as to whether a disclosure is required.

In a recent report published by the Charity Commission and Probono Economics, it was revealed that only 6% of trustees applied for their roles through an advert, and that more than half the charities relied on personal contacts.

Subsequently, the regulator has refreshed its guidance to focus on practical steps charities can take to connect with a broader range of candidates. They also recommend considering a skills audit to identify what the charity needs from its trustees. The guidance makes it clear that trustees can pay for a recruitment service but also signposts a range of free resources. There is also a section on induction to help with retaining good trustees and making them more effective.

The Charities Act 2022 (the Act) received Royal Assent on 24 February 2022 and brings into force a number of key changes to the Charities Act 2011, aimed at simplifying a number of processes.

The Charity Commission are currently working through implementing the various changes brought about by the legislation, and have set out an indicative timetable here: https://www.gov.uk/guidance/charities-act-2022-implementation-plan

Other provisions of the Act in force from 31 October 2022

• Section 5: Orders under section 73 of the Charities Act 2011
• Section 8: Power of the court and the Commission to make schemes
• Section 32: Trustee of charitable trust: status as trust corporation
• Section 36: Costs incurred in relation to Tribunal proceedings etc
• Part of Section 37: Public notice as regards Commission orders etc.
• Part of Section 40 and Schedule 2: Minor and consequential amendments

Provisions of the Act that came into force on 14 June 2023

• Sections 9-14 and 35a: Permanent endowment
• Sections 17, 19-22: Charity land
• Sections 25-28: Charity names
• Section 38 and 39: Connected persons
• Part of Section 40 and Schedule 2: Minor and consequential amendments

Provisions of the Act expected to come into force on 7 March 2024

• Section 1-3: Charity constitutions
• Sections 18* and 23: Charity land
• Section 24 and Schedule 1: Amendments of the Universities and College Estates Act 1925**
• Section 29: Powers relating to appointments of trustees
• Section 31: Remuneration etc of charity trustees etc
• Sections 33, 34 and 35(b): Charity mergers
• Section 37: For remaining purposes
• Section 40 and Schedule 2: For remaining purposes

* Section 18(1) (in part), (2)(a), (2)(c) and (3)(a) will come into force on 7 March 2024. Due to the provisions being linked to section 24 and Schedule 1, section 18(1) (for remaining purposes), (2)(b) and (3)(b) will come into force on 19 May 2025.

** Section 24 and Schedule 1 will come into force on 19 May 2025.

Provisions of the Act expected to come into force later in 2024

Sections 15 and 16: Ex gratia payments

The key provisions of the Act that have been implemented to date are set out below, and further information can be found here: https://www.gov.uk/guidance/charities-act-2022-guidance-for-charities

Making changes to governing documents

The Act introduces a new statutory power to allows trusts and unincorporated associations to make changes to their governing documents.

Charities will still however need to get the Commission’s authority to make certain ‘regulated alterations’ in the same way as companies and Charitable Incorporated Organisations (CIO).

Other related changes include:

how unincorporated charities must pass trustee and (where they have members) member resolutions when using the new power

that the Commission will apply the same legal test when deciding whether to give authority to charitable companies, CIOs, and unincorporated charities changing their charitable purposes

a power for the Commission to give public notice to, or to direct charities to give notice to, regulated alterations they make

The Commission have updated CC36 to reflect these changes, which can be found here: https://www.gov.uk/government/publications/changing-your-charitys-governing-document-cc36

Selling, leasing or otherwise disposing of charity land

The following provisions are now in force:

provisions relating to disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators

provisions relating to the taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators

changes about what must be included in statements and certificates for both disposals and mortgages

The Commission have updated CC28 to reflect these changes, which can be found here: https://www.gov.uk/government/publications/sales-leases-transfers-or-mortgages-what-trustees-need-to-know-about-disposing-of-charity-land-cc28

Charity mergers

For certain mergers, new rules are now in force that will allow most gifts to charities that merge to take effect as gifts to the charity they have merged with.

Updated guidance on charity mergers can be found here: https://www.gov.uk/government/publications/making-mergers-work-helping-you-succeed/how-to-merge-charities

Failed appeals

The Act introduces new rules granting the power for trustees to apply cy-près, allowing charities more flexibility in response to a charity appeal that has failed, allowing donations to be applied for another charitable purposes rather than having to be returned to donors under certain conditions: 

• The donation is a single gift of £120 or less; and the Trustees reasonably believe that during the financial year the total amount received from the donor for the specific charitable purpose is £120 or less (unless the donor states in writing that the gift must be returned if the charitable purposes fail); or
• The donor, after all agreed actions have been taken, cannot be identified or found; or
• The donor cannot be identified (for example cash collections)

The Charity Commission published guidance in relation to failed appeals on 31 October 2022, which can be found here: https://www.gov.uk/government/publications/charity-fundraising-appeals-for-specific-purposes

The Charity Commission has also updated its guidance CC20 ‘Charity fundraising: a guide to trustee duties’ to reflect these changes.

The Fundraising Regulator has also published guidance, further details of which are provided below.

Payments to Trustees for providing goods to the charity

The Charities Act 2011 provided a statutory power for charities, in certain circumstances, to pay trustees for providing a service to a charity beyond usual trustee duties.

The Act extends this power to allow, in certain circumstances for payments to trustees for providing goods to the charity.

Updated guidance can be found here: https://www.gov.uk/guidance/payments-to-charity-trustees-what-the-rules-are

The Charity Commission has also updated its guidance CC29 ‘Conflicts of interest: a guide for charity trustees’ and CC11 ‘Trustee expenses and payments’ to reflect these changes.

Power to amend Royal Charters

Royal Charter charities are able to use a new statutory power to change sections in their Royal Charter which they cannot currently change, if that change is approved by the Privy Council.

Updated guidance can be found here: https://www.gov.uk/guidance/royal-charter-charities

Selling, leasing or otherwise disposing of charity land

Charities must comply with certain legal requirements before they dispose of charity land. Disposal can include selling, transferring or leasing charity land. The Act simplifies some of these legal requirements. The changes include:

• widening the category of designated advisers who can provide charities with advice on certain disposals
• confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements
• giving trustees discretion to decide how to advertise a proposed disposal of charity land
• removing the requirement for charities to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy

Updated guidance can be found here: https://www.gov.uk/government/publications/sales-leases-transfers-or-mortgages-what-trustees-need-to-know-about-disposing-of-charity-land-cc28.

Using permanent endowment

The Act introduces new statutory powers to enable:

• charities to spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Commission authority
• certain charities to borrow up to 25% of the value of their permanent endowment fund without Commission authority

Charities that cannot use the statutory powers will require Charity Commission authority.

In addition, a new statutory power enables charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.

Updated guidance can be found here: https://www.gov.uk/guidance/permanent-endowment-rules-for-charitieshttps://www.gov.uk/government/publications/total-return-investment-for-permanently-endowed-charities

Crowe are pleased to have been involved in a research project looking at the essential attributes that charity Chairs of the future will need to embrace. This research explored the topic through roundtable discussions and in-depth interviews, with the final thought leadership report published in June 2024.

The research aimed to:

• Contribute ideas that will help to shape the future development and recruitment of charity Chairs.
• Enhance the future sustainability of the charity sector by highlighting longer term considerations for Board discussion.
• Provide fresh thinking to positively influence regulation and best practice guidance for the sector.
• Emphasise the value of good charity governance and the need for it to continually evolve to remain relevant.

The research highlighted a number of key findings, including challenges from a lack of diversity within charities (including trustees, staff and volunteers), and the need to recruit individuals who represent the charity’s beneficiaries.

Recommendations raised within the report include developing a leadership development programme for current Chairs, succession planning and a need to promote the role as one of ambition and aspiration.

The full report can be found here: The future charity chair | Bayes Business School (city.ac.uk)

The National Cyber Security Centre has published a report outlining the cyber threats currently facing charities of all sizes.

The 2023 DCMS Cyber Security Breaches Survey, which measures the policies and processes organisations have for cyber security, as well as the impact of breaches and attacks, highlighted 24% of UK charities had identified a cyber-attack in the last 12 months, a decrease from 30% in 2022. The drop is driven by smaller organisations – the results for medium and large businesses, and high-income charities, remain at similar levels to last year.

The report notes that the charity sector is particularly vulnerable as they can hold significant amounts of sensitive or valuable data, making them attractive targets, alongside a perception that charities have fewer resources to commit to cyber security.

The report provides details of the commonly perpetrated cyber-attacks, as well as a number of recommendations and links to guidance to assist charities strengthen their defences.

A copy of the report can be obtained here: https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2023/cyber-security-breaches-survey-2023#summary

In March 2024, the Charity Commission published new guidance to help charities when deciding whether to accept, refuse or return a donation.

The guidance explains when donations must be refused or returned and when these might likely need to be refused or returned. The guidance makes clear that trustees should start from a position of accepting donations, but from time to time a charity may face a difficult decision as whether to refuse or return a donation. The guidance sets out an approach for trustees to take on these occasions, advising they: 

• consider the risks involved in refusing or returning the donation, and how likely and serious these are. These include negative financial impact, ability to deliver services and ability to attract donations in future 
• consider the risks involved in accepting or keeping the donation, and how likely and serious these are. These include the likelihood of reduced support or reputational harm, particularly among supporters or beneficiaries 
• determine how any decision aligns with their charity’s purposes 
• determine what steps they can take to mitigate the risks. These include negotiating the terms of a conditional donation with the donor or developing a public explanation for a decision

It explains that if a charity is considering refusing or returning a donation, the charity must have the legal power to refuse or return a donation. In some situations, there are additional legal rules to consider e.g. disposal or land or properties of a special trust.

The charity should also consider whether it needs to make a SIR when it refuses or returns a donation.

Ultimately, as the guidance states: “Deciding whether to accept, refuse or return a donation is likely to involve a careful balancing exercise. There may be no right or wrong answer, but your decision must be rational and reasonable, and supported by clear evidence.”

The full guidance can be obtained here: https://www.gov.uk/guidance/accepting-refusing-and-returning-donations-to-your-charity

A new failure to prevent fraud offence has been introduced by the Economic Crime and Transparency Act 2023. It will apply to all large corporate entities, including charitable companies, Royal Charters and CIOs.

When considering the size criteria, it is worth noting that the legislation references the financial year of the entity that precedes the year of the fraud offence.
An offence is committed where an employee or agent commits fraud. The penalty is an unlimited fine for the organisation, and no personal liability will be introduced for trustees or management failure to prevent fraud.

The legislation is far-reaching, and where an organisation operates or is based overseas, if an employee commits fraud under UK law or affecting UK victims, the company can be prosecuted.

There is a defence to the failure to prevent economic crimes if the organisation can prove that it had reasonable prevention measures in place, or that it was not reasonable in all the circumstances to expect it to have had any procedures in place.

The guidance for the new corporate criminal offence of 'failure to prevent fraud' has been published by the UK government. The Act aims to hold large organisations accountable if they benefit, or there is an intention to benefit, from fraudulent activities conducted by their employees, agents, subsidiaries, or other associated persons. Organisations have to put in place proactive measures and reasonable procedures to provide a defence to criminal liability for failing to prevent fraud and other economic crimes by associated persons.
The offence sits alongside existing law; for example, the person who committed the fraud may be prosecuted individually for that fraud, while the organisation may be prosecuted for failing to prevent it. 

The offence, which will come into effect on 1 September 2025, applies to all large incorporated bodies, subsidiaries, partnerships, and large not-for-profit organisations such as charities if they are incorporated and have a Royal Charter. Whilst unincorporated charitable trusts may not be included, this guidance is considered as being best practice. It is important to note that the size criteria is considered in the year preceding the fraud offence. An organisation will be criminally liable if an associated person commits fraud intending to benefit the organisation, such as through dishonest sales or commercial practices, hiding important information from consumers or investors, or dishonest practices in financial markets.

The guidance sets out six principles that should inform fraud prevention frameworks put in place by organisations in order to comply with the law – top-level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication (including training), and ongoing monitoring and reviews. 

Risk assessments must fully consider the potential for relevant economic crimes to be committed. These include but are not limited to fraud. Onboarding of employees and ‘associates’ must be reviewed and mitigation measures put in place. Sufficiency of training which is properly tailored to the particular employees involved is increasingly an area of regulatory focus and must also be part of the policies and procedures put in place here.

Full details of the guidance can be found here.

Another aspect of the Act is to improve the accuracy and quality of data filed with the Registrar of Companies, helping to tackle economic crime and boost confidence in the UK economy.
From a company secretarial point of view, the most significant change introduced by the Act is the reform of Companies House.

Key changes

Registered office address to be ‘appropriate’

All companies must now have an ‘appropriate address’ as their registered office. This means that documents sent to the registered office address will reach someone acting on behalf of the company and that delivery can be acknowledged. Companies are not allowed to use a PO Box address. In the event of non-compliance, Companies House will change the registered office address to a default address.

Registered email address

Both existing and new companies must provide Companies House with a registered email address for communication purposes. This information must be included when filing the next confirmation statement with a statement date of 5 March 2024 onwards or at the time of incorporation. A new company cannot be incorporated without this information, and existing companies will not be able to file a confirmation statement without it.

Statement of lawful purpose

After 4 March 2024, new companies must confirm that they are being incorporated for a lawful purpose. Existing companies will need to confirm annually in the confirmation statement that their intended future activities will be lawful.

Broadening of Registrar’s powers

The Registrar will have enhanced powers to question information filed at Companies House and request additional information to ensure that documents are timely, accurate, and not misleading. Companies House will have greater authority to scrutinise, query, and reject information that is filed or is in the process of being filed.

Authorised Corporate Service Provider (ACSP)

Under new identity verification measures, most documents filed at Companies House must be delivered by an ACSP. This includes incorporations, officer appointments (directors, secretary, members of LLP, partner of LP) and PSC appointment. This means if you are filing these documents with Companies House, then you will need professional corporate service providers to do this for you, or you will have to follow the additional identity verification steps to be introduced by Companies House.

Changes to be introduced to Company Accounts

Companies House is currently working on mandating digital filing and full tagging of financial information in an iXBRL format. The number of times a company can shorten its Accounting Reference Period will be reduced. Small companies will be required to file a profit and loss account and a directors’ report, while micro-entities will need to file a profit and loss account. The option to file abridged accounts will be removed, and companies claiming an audit exemption will need to provide an additional eligibility statement.

Restrictions on the use of corporate directors

All directors (or director equivalents) of the entity that have been appointed as a corporate director must be natural persons, and those natural person directors must have undergone an appropriate identity verification process. Historically, any corporate entity could be appointed as a corporate director of a UK company. However, moving forward, only UK-registered entities will be eligible for appointment as corporate directors, and all directors (or director equivalents) of such entities must be natural persons. Companies with existing corporate directors will be given 12 months to comply; within that time, they must either ensure their corporate director is compliant with the principles or resign them.

Considering the recent changes introduced by the Act, boards of directors will need to review their current processes for filing at Companies House, adopt new systems for verifying filings, monitor identity verification requirements, introduce new policies on director changes, and review the appropriateness of the company's registered office address.

On 10 April 2025, the government published the results of its Cyber security breaches survey 2025. Its clear from the results that cyber security breaches and attacks remain a common threat.

Headline statistics from the report include:

• Just over four in ten businesses (43%) and three in ten charities (30%) reported having experienced any kind of cyber security breach or attack in the last 12 months. This equates to approximately 612,000 UK businesses and 61,000 UK charities that identified a cyber breach or attack in the past year. This represents a decrease in prevalence among businesses compared to 2024 (where 50% experienced a breach or attack, equating to 718,000 businesses).
• Of businesses or charities that experienced a breach or attack in the last 12 months, phishing attacks remain the most prevalent and disruptive type of breach or attack (experienced by 85% of businesses and 86% of charities). The qualitative interviews highlighted that phishing attacks were often cited as time-consuming to address due to their volume and the need for investigation and staff training. The qualitative interviews also found that organisations had a growing consciousness that increasingly sophisticated methods, such as AI impersonation, were becoming mainstream.

Cyber hygiene

Encouragingly, small businesses showed improvement in several cyber hygiene practices, including showing an increased uptake of cyber security risk assessments (48%, an increase from 41% in 2024), cyber insurance (62% up from 49% in 2024), formal cyber security policy covering cyber security risks (59% up from 51% in 2024), and business continuity plans that address cyber security (53% up from 44% in 2024).

Conversely, high-income charities showed a decline in several key areas compared to 2024, including activities to identify cyber security risks (75% down from 86% in 2024), reviewing immediate supplier risks (21% down from 36% in 2024), and having a formal cyber security strategy in place (39% down from 47% in 2024). Insight from the qualitative interviews suggest this could be linked to budget constraints.

A formal cyber security strategy was in place for seven in ten large businesses (70%) and significantly fewer medium businesses (57%).

The majority of businesses and charities have implemented basic technical controls, such as updated malware protection (77% businesses and 64% charities), password policies (73% businesses and 57% charities), network firewalls (72% businesses and 49% charities), backing up data securely via a cloud service (71% businesses and 58% charities) and restricted admin rights (68% businesses and 68% charities). However, adoption of more advanced controls like two-factor authentication (40% businesses and 35% charities), a virtual private network for staff connecting remotely (31% businesses and 20% charities) and user monitoring (30% businesses and 31% charities) remains lower than other measures.

Staff training and awareness raising activities on cyber security were more prevalent in large businesses (76% compared to 19% businesses overall). Whilst a consistent increase among large businesses on this measure was observed in recent years, the proportion of large businesses in 2025 remains in line with 2024 (74%).

In March 2023 the government opened a consultation exercise to review the legislation governing holiday entitlement and holiday pay, which had over time become complex, and in some cases, difficult for employers to follow.

The consultation exercise ended on 7 July 2023, and the government’s response was published on 8 November 2023. The response indicates that the following actions will be taken: 

• Introduce an accrual method for calculating holiday
• Entitlement will be calculated as 12.07% of hours worked in a pay period for irregular hours and part year workers. All other workers will accrue leave at 1/12th of their entitlement on the first day of each month during their first year of employment. 
• Sanction rolled-up holiday pay (RHP)
• Legislation will be introduced to allow RHP for irregular hours workers and part-year workers only. 
• Introduce a definition of irregular hour workers & part-year workers
• Legislation will be updated to define what is meant by irregular hours workers and part-year workers.

The Government has laid out revisions in respect of the above as part of The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, effective from 1 January 2024.

Irregular hours and part-year workers

To the relief of many employers the revised Working Time Regulations (‘WTR’) will include provisions aimed squarely at addressing the flaws laid bare in the Harper Trust v Brazel case in which it was held part year workers on permanent contracts were entitled to a full year’s holiday entitlement, regardless of the number of weeks worked.

For holiday years from 1 April 2024 individuals who work irregular hours or part-year (such as term time or casual workers) will accrue holiday on the last day of each pay period at a rate of 12.07% of the number of hours worked during the pay period. This will ensure that their entitlement will remain in proportion to the hours that have been worked and differs from other employees who receive their full entitlement at the start of a holiday year. It is open to employers to allow the employee to take more holiday than they have accrued – in such cases its essential that employment contracts reserve the right for the employer to deduct over usage from final salaries.

For the same group of workers the revised WTR sees a welcome return of rolled-up holiday pay. Rolled-up holiday pay is where the accrual in a pay period is paid to the employee with their basic salary rather than when they actually take their holiday. The practice was outlawed because in the opinion of the European Court of Justice it discouraged workers from taking time off. However, for many casual work arrangements rolled up holiday pay is the only logical approach and many employers have continued to apply it.

From 1 April 2024 rolled up holiday pay will be permitted on condition that: 

• the individual is a part-year or irregular hours worker 
• the holiday pay is calculated using 12.07% of all pay for work done 
• the holiday pay (12.07%) is paid at the same time as the pay for work done 
• the holiday pay is separately itemised on the payslip.

It’s worth noting that the 12.07% formula does not account for the different holiday pots that we covered at the start of this article and therefore in some cases it could result in higher rates of holiday pay.

It is also the case that an employer has a legal duty to ensure that an individual takes their 5.6 weeks of holiday per year and this duty applies even when they are paid using rolled-up holiday pay and not when they actually take their holiday – which could make it difficult to monitor.

Record Keeping

Following a 2019 decision by the European Court of Justice employers have been required to record the daily hours worked by their employees.

Under the revised WTR employers will be required to keep records that evidence compliance with the 48-hour week, opt-out agreements, length of night work and health assessments for night workers, and therefore an employer is not required to record daily hours if they can evidence compliance by other means.

Key Takeways

The revisions to the WTR should be welcome news for most employers, although in some areas they lack detail – such as a lack of definition around normal earnings for the calculation of holiday pay.

Employers of irregular and part year workers will be eager to adapt their processes to accommodate ‘accrue as you go’ and rolled up holiday pay.

For some employers it will be the much-needed spur to start and correctly calculate holiday pay and for others a need to evaluate the true status of their self-employed contractors.

However, for almost all employers there will be a need to look at policies and procedures to ensure that they align with the new rules on holiday carry over and ensure that ‘use it or lose it’ prompts are timetabled before the end of the holiday year.

The full article can be obtained here: https://www.crowe.com/uk/insights/holiday-entitlements 

The Worker Protection (Amendment of Equality Act 2010) Act 2023 received Royal Assent on 26 October 2023, and came into force on 27 October 2023, and introduces a new duty on employers to take reasonable steps to prevent sexual harassment of their employees in the course of their employment. ‘In the course of their employment’ covers activities outside of the workplace, for example work social events.

This new duty to prevent sexual harassment will be enforceable by an employment tribunal, where it has first upheld a claim for sexual harassment. A tribunal will have the discretion to award a ‘compensation uplift’ by increasing any compensation it awards for sexual harassment by up to 25% where there has been a breach of the employer’s duty in sexual harassment cases.

The Equality and Human Rights Commission’s guidance on sexual harassment and harassment at work contains steps employers should consider taking in order to prevent and deal with harassment at work. These steps include having an effective and well communicated anti-harassment policy in place and maintaining a reporting register of complaints for all forms of harassment.

A copy of the guidance can be found here: https://www.equalityhumanrights.com/sites/default/files/sexual_harassment_and_harassment_at_work.pdf

In November 2023 the Fundraising Regulator has published its latest Annual Complaints Report which covers the period 1 April 2022 to 31 March 2023. The report analyses complaints received by the Fundraising Regulator and complaints reported to 58 of the UK’s largest fundraising charities.

The number of complaints to the sample charities rose proportionally for most methods in line with increased fundraising activity – with 13 of the 23 fundraising methods having increased complaint numbers in 2021/22 compared to 2020/21. The overall number of complaints had increased since 2021/22 which is reflective of increases in fundraising activity since the pandemic.

Over the same period, complaints about fundraising methods including door to door fundraising (60), charity bags (57) and addressed mail (51) accounted for the majority of the 270 complaints within the Fundraising Regulator's scope. A common theme was that of misleading information, highlighting the importance of clarity in fundraising materials.

You can see the full report here.

The National Cyber Security Centre have launched a new free digital service, MyNCSC, which aims to enhance charities’ cyber security approach.

MyNCSC combines Active Cyber Deference (ACD) digital services, offering a unified experience tailored to each user’s needs, including content, vulnerabilities, and alerts.

The MyNCSC platform is a free service for UK registered charities, enabling organisations to access various ACD services, such as: 

• early warning 
• mail check, assessing email security compliance 
• web check, finding and fixing common security vulnerabilities in the charity’s website

There are plans to gradually increase the number of ACD services integrated with MyNCSC.

MyNCSC offers a unified user interface for accessing multiple services promoting collaboration within organisations when managing digital assets and viewing findings.

For further information and guidance on how MyNCSC works, visit: https://www.ncsc.gov.uk/information/myncsc

The Financial Reporting Council (FRC) issued amendments to financial reporting standards on 27 March 2024, the changes are mostly effective for accounting periods beginning or after 1 January 2026. This follows the consultation impact assessment during 2023.

The amendments include:

• a new model of revenue recognition in FRS 102 and FRS 105 based on the IFRS 15 five-step model for revenue recognition with appropriate simplifications
• a new model of lease accounting in FRS 102 based on IFRS 16 on-balance sheet model (again with appropriate simplifications)
• various other incremental improvements and clarifications.

The SORP committee have issued an Exposure Draft of the revised SORP for consultation, reflecting on the changes made to FRS102. The consultation closed on 20 June 2025. 

The consultation documents can be obtained here.

 

ICAEW, with input from Crowe, has published guidance exploring ten myths surrounding charities and their operations, with a view to encourage transparent communication in areas where these misconceptions are prevalent. The ten myths considered are: 

• Charities spend too much on fundraising. 
• They should not make a surplus or build up cash reserves. 
• Too much is spent on highly paid executives. 
• Charities should be run and staffed [for free] by volunteers. 
• Too much is spent on overheads. 
• Charities don’t pay taxes, so need less money. 
• Professional qualifications are needed to become a charity trustee. 
• Charities are less vulnerable to fraud than other organisations. 
• Charities should not engage in campaigning and political activity.

The guidance includes access to a webinar discussing some of the key myths with voices from the sector.

The Guidance can be found here: Dispelling common myths about charities | ICAEW

The Charity Digital Skills annual report has been running since 2017 and tracks the sector during a time of significant change due to the impact of the pandemic. As we continue to navigate the cost of living crisis and the impact on the sector, this report aims to shed some light on how the digital capabilities of charities have evolved and highlighting key trends.

The report highlights that: 

• Three quarters (78%) of charities say that digital is more of a priority for their organisations 
• 1 in 5 charities say their IT provision is poor 
• 8 out of 10 (79%) of charities see improving their website, digital presence or social media as the greatest priority for the next year 
• Improving data security, privacy and GDPR compliance has become more of a priority since 2022. 
• Almost half (46%) of charities say they do not have anyone with digital expertise on their board

The gaps seen in previous years persist, these include funding and leadership. With the rapid growth in AI development charities must ensure that digital skills remain a priority to avoid being left behind.

Digital Skills Report for the Charity Sector - Introduction (charitydigitalskills.co.uk)

The penalties for late filing of company tax returns will be doubled from their existing rates with effect for returns with a filing date on or after 1 April 2026. This is the first increase to late filing penalties since 1998.

The immediate penalty for a single late filing will increase from £100 to £200, with higher flat rate penalties of up to £2,000 applicable in instances of multiple failures and/or where returns are more than three months late.

Charitable companies will be subject to these late filing penalties for tax returns filed late in respect of any period for which a notice to file a tax return was issued to the charity by HMRC.

National Insurance contributions relief on pension contributions made through salary sacrifice schemes will be capped at £2,000 per year of contributions for each employee with effect from April 2029. Contributions above the £2,000 limit will be subject to both employee’s and employer’s contributions.

HMRC have updated their Gift Aid guidance to set out an interim position on the Gift Aid eligibility of charity membership subscriptions subject to the provisions of the Digital Markets, Competition and Consumers Act 2024, while legislation on this matter as promised at the Spring Budget 2024 is awaited.

The updated guidance confirms that membership schemes and contracts that are subject to consumer protection law, where a charity is required by those protections to provide a full or partial refund to a consumer, will not be treated as being subject to a condition as to repayment for Gift Aid purposes. Where a refund is actually made, however, the membership subscription will cease to qualify for Gift Aid.

The updated guidance is available at section 3.13.4 here.

A major VAT reform unveiled in the Budget is expected to unlock millions of pounds’ worth of surplus goods for charity and significantly reduce the volume of usable products sent to landfill.

From 1 April 2026, businesses will be able to donate goods to registered charities without incurring a VAT charge, removing a long-criticised tax barrier that has deterred companies from giving away unsold, returned or surplus items.

Under current rules, gifting goods — even to a charity — can trigger VAT on a “deemed supply” basis, meaning many firms choose to destroy stock rather than shoulder a tax liability. The government says the new relief will eliminate that cost entirely for donations made.

The scheme will use a simple two-tier valuation system:

• A £100 per-item limit for most donated goods.
• A £200 per-item limit for essential items including white goods, furniture, computers, phones and tablets — targeting support for households experiencing digital or material poverty.

Increase to company size thresholds for IR35

The issue Under the off-payroll working rules (IR35), medium and large organisations are responsible for determining the employment status of contractors.

The change: From 6 April 2025, the thresholds that define a medium/large organisation have increased to:

• turnover: Over £15 million (previously £10.2 million)
• balance sheet total: Over £7.5 million (previously £5.1 million)
• employees: 50 or more (unchanged).

Charities that fall below these thresholds will not be responsible for assessing IR35 status, the obligation lays with the contractor.

Issues to consider: Charities should review their latest accounts to confirm whether they now qualify as 'small' under the revised thresholds. Where group structures exist, it’s important to check whether a parent entity’s size could still bring the charity within scope. While this change reduces the compliance burden, reputational and operational risks remain if off-payroll arrangements are not well managed.

Joint and Several Liability for Umbrella Company PAYE Failures

The issue: Umbrella companies often manage payroll for temporary workers and contractors. However, some have failed to meet PAYE obligations historically, leaving HMRC unable to recover tax and National Insurance Contributions (NICs). To date, end clients have not typically been held liable for these failures.

The change:  From April 2026, HMRC will be able to pursue joint and several liability for unpaid PAYE where an umbrella company fails to meet its obligations. This means that charities engaging workers through umbrella arrangements could be held liable for unpaid tax, even if they were not directly responsible for the failure.

Issues to consider: Charities should review their use of umbrella companies and ensure robust due diligence is in place. This includes verifying PAYE compliance, understanding the full labour supply chain, and documenting checks. More detail can be found here.

Using a VAT trading subsidiary within a VAT group to apply VAT to care services

The issue: Revenue and Customs brief 02/2025 covered updated guidance in relation to using a trading subsidiary in a VAT group to apply VAT to care services that would otherwise be VAT exempt. This planning has been adopted by a number of charities because its implementation improves VAT recovery on costs.

The change: HMRC will no longer allow VAT groups to include subsidiaries on this basis and will also seek to remove them from a VAT group where the reason for inclusion is deemed necessary to ‘protect the revenue’. Any charities using this planning need to review their current arrangements to consider what action should be taken. Please click here for more information and areas to consider if your charity has adopted this planning.

VAT exemption for fundraising events

The issue: Revenue and Customs brief 03/2025 provided information in relation to the exemption that covers fundraising events following the case of Yorkshire Agricultural Society.

The change: This potentially broadens the exemption, as the Tribunal found that HMRC had been too narrow in its definition of the primary purpose of the event – this could mean that a claim for overpaid VAT could be made to HMRC. Please click here for more information.

VAT Compliance Controls

HMRC issued very detailed guidance on VAT compliance and what they expect from taxpayers: Help with VAT compliance controls — Guidelines for Compliance GfC8 - GOV.UK

There is a lot of detail to wade through with ten different elements to consider. The overriding point from HMRC is that you must document the VAT risks and how you have reduced the risk of errors. We suggest that such processes need to be recorded and checked.

“The guidelines set out HMRC’s recommended approach and are designed to help you understand our expectations as you plan, carry out, and review the accounting and compliance processes that ensure VAT is accurately declared by your business.”

HMRC would expect to see a tax control framework, i.e., written processes/documentation of internal controls. As HMRC are beginning to increase the level of taxpayer visits, we would expect them to ask for this documentation.

HMRC’s Gift Aid guidance has been updated to clarify that Gift Aid declarations should not include a company name or joint names, as this will invalidate the declaration.

HMRC also confirmed recently that they have been checking Gift Aid claims using specific search terms to ensure that the address provided by the donor is not a business address.

Charities are encouraged to review the guidance (https://www.gov.uk/government/publications/charities-detailed-guidance-notes/chapter-3-gift-aid#chapter-36-gift-aid-declarations) to make sure that the information on their Gift Aid declarations and claims are consistent with the specific requirements of the guidance.

HMRC have published their latest annual statistics on UK charity tax reliefs for the 2024-25 tax year.

The newly published statistics show a moderate increase of 7% in Gift Aid repayments, totalling £1.7 billion, up from last year’s £1.6 billion. Gift Aid payments have shown a consistent upward trend for the last few years, and rising from £1.2 billion in 2015, an overall 42%.

Read our full summary here.

HMRC are currently writing to charities to provide information about preparing Gift Aid claims correctly. The letters include information about Gift Aid declarations, audit trails and record keeping. No specific response is required to the letters, although they highlight the importance of ensuring compliance with the requirements of Gift Aid, particularly as HMRC appear to be undertaking more rigorous review procedures for Gift Aid claims and in some cases may reject whole claims even where only relatively minor errors have been identified.

According to a February 2025 update to HMRC guidance, charitable trusts completing a Trust and Estate tax return must have the return signed or countersigned by a trustee of the charity. See chapter 6.3.9: Chapter 6: Claims and returns - GOV.UK

The consultation addressed four key areas of tax compliance for charities. A summary of these areas and the proposed changes to tax legislation are outlined below.

The first three of these areas will take effect from April 2026, while HMRC plans to publish draft guidance for the measure to sanction charities for failure to meet their tax obligations at a later date.

Preventing donors from obtaining a financial benefit from their donation

The issue: Existing legislation on Tainted Charity Donations does not have a wide enough scope to capture all possible arrangements between charities and donors that could be used to exploit tax reliefs on charitable donations for financial advantage.

The change: The legislation will be amended to lower the bar for challenging transactions, and the current motive test will be replaced with an outcome test. This is expected to allow HMRC to consider a series of transactions in the round and allow for a more objective assessment of the interactions between a donor and a charity.

Issues to consider: Charities may wish to assess any long term arrangements they have with donors in order to be ready to assess whether any changes will need to be made to these arrangements to minimise the risk of falling into the tighter scope of the new rules.

Preventing abuse of the charitable investment rules

The issue: Under current legislation, certain types of investment qualify automatically as approved charitable investments, irrespective of how the investment is actually used.

The change: Legislation will be amended so that all investments (as opposed to only ‘Type 12’ investments under current legislation) must be demonstrably for the benefit of the charity and not for the avoidance of tax. Investments which do not meet this test will not be approved charitable investments and may lead to a tax exposure.

Issues to consider: Charities may wish to review their investment policies for all types of investment to ensure that sufficient evidence will be available in the event of an enquiry to demonstrate that all investments are made for the financial or charitable benefit of the charity. Further guidance on approved charitable investments is available here.

Closing a gap in non-charitable expenditure rules

The issue: The non-charitable expenditure rules under current legislation do not account for legacy income as a type of ‘attributable income’. This provides scope for charities to use legacy income for non-charitable purposes without incurring a tax charge.

The change: Legislation will be amended so that income which is relievable in either the charity’s hands or the donor’s hands will be included within the ‘attributable income’ definition.

Issues to consider: Charities should assess their proposed expenditure from legacy funding to ensure that this will not fall within the tax law definition of non-charitable expenditure. Further guidance on non-charitable expenditure is available here.

Sanctioning charities that do not meet their filing and payment obligations

The issue: Some charities are persistently failing to meet their tax compliance obligations whilst also taking advantage of reliefs and exemptions available to them as charities.

The change: The Fit and Proper Persons test will be amended so that a manager of a charity who persistently fails to comply with the charity’s tax obligations will fail the management condition. This may ultimately lead to the loss of recognition as a charity for tax purposes and to the loss of charitable reliefs and exemptions.

Issues to consider: Charities may consider appointing a suitable official to be responsible for ensuring compliance with the charity’s tax compliance obligations, including the filing of tax returns which are in many cases requested on a rotational basis from charities.

Draft legislation covering the first three of these four key areas was published on 21 July 2025 and is available here.

HMRC guidance has been updated to confirm that in circumstances where it is necessary to determine the market value of a land transaction for SDLT purposes, it is not necessary to obtain a formal valuation. This is a useful clarification particularly for charities receiving a transfer of land under an incorporation or merger, where the market value may be reportable even where no SDLT is payable due to charitable reliefs.