Charities Act 2022: What You Need to Know
The Charities Act 2022 was passed with the intention of providing more flexibility for trustees to manage their charities. The gradual implementation of the Charities Act 2022 is intended to conclude in autumn 2023.
Certain provisions of the Act first came into force on 31 October 2022. Following this, additional provisions came into force on 14 June 2023. These were:
- Sections 9-14 and 35(a): 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
The new provisions centring on permanent endowment allow charities to have more flexibility. Now charities are only required to seek permission to spend the endowment from the Charity Commission if the value of the market value of the permanent endowment exceeds £25,000.
A new statutory power will also allow charities to borrow from their permanent endowment (a maximum of 25% of the endowment fund value and a repayment term of 20 years).
Charity Land and connected persons
Under the new provisions, changes have been made to the charity land disposal procedures. Disposals of charity land include selling, transferring or leasing charity land or granting rights over it including easements.
Charities now have more flexibility complying with the disposal rules as the category of designated advisers who provide charities with advice in particular types of disposals has widened. The requirement for Charity Commission authority to grant short residential leases to a charity employee (i.e. short periodic tenancy or fixed term tenancy of under one year to allow an employee of the charity to live in charity owned property) has also been removed.
The statutory provisions under sections 25-28 Charities Act 2022 confer supplementary powers to the Charity Commission allowing them to instruct charities to change their working names or no longer use their working names if they are the same or similar to the working name of another charity.
There remains some final provisions to be implemented, due to come into force by the end of 2023. There are:
- 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 (these will come into force in Sprint 2025)
- 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
The implementation plan for the Charities Act 2022 can be found here: Charities Act 2022: implementation plan - GOV.UK (www.gov.uk)