Charities Act 2022 | What’s on the Horizon

Charities Act 2022 | What’s on the Horizon

Being sector specialists and working in the charity sector, Azets work alongside other charity professionals who equally specialise in advising charities. One of the key areas of development in recent times is the new Charities Act 2022. The Charities Act underpins what charities can do and how they do it.

To find out more we asked Wrigleys Solicitors LLP to outline what to look out for in the forthcoming Act.  Fiona Wharton (partner) and Sophie Henson (solicitor) are both sector specialists, helping charities with their legal affairs, have outlined the key changes to look out for.

Overview

The long-anticipated Charities Act 2022 received Royal Assent on 24^th February this year. The Act brings in a range of new provisions aiming to reduce the administrative burden on charities.

What does the Charities Act do?

The Charities Act makes a lot of technical changes to the law, but key highlights include changing:

• the law on amending governing documents for all types of charity (so care will need to be taken in making the changes: some changes will be easier but some changes which were not regulated before now will be);
• the process charities have to go through to dispose of land, simplifying the advice they need to receive;
• the ‘permanent endowment’ regime, to give a little more flexibility (and clarity);
• the provisions allowing payment to trustees to include payments for goods (not just those provided with a service);
• the provisions dealing with failed appeals, to simplify the rules and make them slightly easier to follow;
• the law relating to trust corporations, so that incorporated charities will automatically be treated as trust corporations rather than needing the involvement of the Charity Commission or the Ministry of Justice (which will help with changing trustees in some circumstances).

When will the Charities Act be implemented?

The provisions of the Act will be brought in in stages to give charities and the Commission time to amend their systems and processes and prepare for the changes. Different provisions are expected to come into force on three difference dates over the next 18 months as follows:

Provisions of the Act expected to come into force Autumn 2022

• Section 4: Power to amend Royal Charters
• Section 5: Orders under section 73 of the Charities Act 2011
• Sections 6 and 7: Cy-près powers
• Section 8: Power of the court and the Commission to make schemes
• Sections 15 and 16: Ex gratia payments
• Section 30: Remuneration of charity trustees etc. providing goods or services to charity
• 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 expected to come into force Spring 2023

• Sections 9 to 14 and 35a: Permanent endowment
• Sections 17 to 23: Charity land
• Section 24 and Schedule 1: Amendments of the Universities and College Estates Act 1925
• Sections 25 to 28: Charity names
• Sections 38 and 39: Connected persons
• Part of Section 40 and Schedule 2: Minor and consequential amendments.

Provision of the Act expected to come into force in Autumn 2023

• Sections 1 to 3: Charity constitutions
• Section 29: Powers relating to appointments of trustees
• Section 31: Remuneration etc. of charity trustees etc.
• Sections 33 to 35: Charity mergers
• Sections 37: For remaining purposes
• Section 40 and Schedule 2: For remaining purposes

However, this timetable could change and it will be something for charities and advisors to keep an eye on in the coming months. It is important that until the new sections are brought into force, the law as it currently stands is complied with but it is worth factoring in these upcoming statutory powers if they could assist with any of a charity’s proposed changes. 

Summary

The key message to charities appears to be; whilst the law governing them is changing, ongoing activities are likely to be largely unaffected.  However, if there are any more fundamental changes being planned (e.g. to the way the charity is constituted, or if there is a plan to change how endowed funds are being used, plans to sell land or pay trustees) then speak to a charity specialist legal advisor in advance, to ensure that your charity can take advantage of the forthcoming changes.