The Charities Act 2022: Update on provisions that were implemented on 14 June 2023
In 2017 the Law Commission published a report outlining several issues surrounding the law regarding charities; technical issues with the operation of the legislation were causing problems for many charitable organisations.
Therefore, the Charities Act 2022 received Royal Assent on 24 February 2022 in order to effect some of the changes that the report had recommended.
However, the plan for implementing these changes involved a staged timetable, with various amendments being announced at different stages; the full timetable can be found here: Charities Act 2022: implementation plan. This guidance focuses on the round of changes introduced on 14 June 2023 (the “New Changes”) and the impact they will have on how the law affects charities.
What is Permanent Endowment?
The term ‘Permanent Endowment’ refers to a category of funds subject to a restriction on how the capital may be spent.
However, the New Changes introduced new rules enabling charities to spend small amounts of their permanent endowment.
The New Changes allow charities to spend from a “smaller value” permanent endowment fund of £25,000 or less or borrow up to 25% of their permanent endowment fund without Charity Commission authority.
However, this is only available in certain circumstances; updated Government guidance on the operation of permanent endowment funds: Permanent endowment: rules for charities.
Selling, Leasing or Disposing of Charity Land
The rules around the disposal of land owned by a charity were designed to be very tightly drafted to prevent charities from carrying out transactions involving their land for improper reasons.
The New Changes loosen some of these requirements in an attempt to make the process of dealing with land simpler for charities. The updated guidance from the Government: Selling, leasing, or otherwise disposing of charity land in England and Wales. Further changes in this area are also expected by the end of 2023.
The changes include:
1. Widening the category of “designated adviser” who can provide advice on certain disposals.
Previously a qualified surveyor, who is a member of the Royal Institution of Chartered Surveyors, needed to provide a report; now, certain other experienced individuals can provide advice instead, including, where appropriate, the National Association of Estate Agents, The Central Association of Agricultural Valuers; as well as qualified charity trustees, officers and employees.
2. Confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements.
This change simply clarified something that had been the subject of repeated questions regarding the previous rules.
3. Giving trustees more discretion on how to advertise a proposed disposal of charity land.
The previous rules gave very specific rules around how a disposal of charity land must be advertised; this has now been made more flexible according to the charity trustees’ discretion.
4. 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.
This allows a charity to permit one of its employees to live in one of its properties for a short time without needing Charity Commission authority.
The New Changes give the Charity Commission further control over the name that a charity chooses. For example, the Commission may now direct a charity to stop using a working name (similar to a company’s ‘trading as’ name) if it is offensive, misleading or too similar to another charity’s name. Guidance on choosing a name for a charity: How to choose a charity name.
Finally, the New Changes have updated the definition of a ‘Connected Person’ to remove some outdated language, such as the term “illegitimate child” within the definition.
Contact our commercial property solicitors today
If you need legal assistance in relation to your business, please do not hesitate to get in touch with a member of our Commercial Property team or complete this online enquiry form, and we will be happy to assist you with your enquiry.
How can we help?
If you have an enquiry or you would like to find out more about our services, why not contact us?