As a reminder, the Charities Act 2022 was passed last year, but the provisions did not come into force straight away, primarily to allow time for the Charity Commission to update its guidance and get ready for the new provisions. The provisions are being phased in over about 18 months and the first tranche came into force on 31st October.

The second phase of provisions were originally due to come in during Spring 2023. But in late May 2023, DCMS updated the implementation plan to flag that the changes would now be due in June 2023. With little notice, we now understand that the second phase provisions (with some exceptions) will come in tomorrow, 14th June.

Here’s a quick look at the key changes coming in.

Charity land

The new provisions relating to charity land are heralded as cutting red tape and reducing costs for charities.

Perhaps the most significant change is the extension of the list of professionals who can advise charities on disposals of charity land to include certain estate agents registered with PropertyMark and Agricultural Valuers as well as qualified charity trustees, officers and employees. Other key changes are simplification of rules on the contents of reports (previously called “qualified surveyors reports”) and changes to applicability of the Act to certain properties held on trust.

The new Charities (Dispositions of Land: Designated Advisers and Reports) Regulations 2023 will also come into force on this date and the old 1992 Regulations setting out the form and contents of qualified surveyors reports will be revoked.

The Regulations also set out the transitional provisions that will apply. It is important to be aware that provided that a charity has instructed its adviser before 14 June 2023 to prepare a report for the purposes of complying with section 119(1) of the 2011 Act, the old 1992 Regulations will apply to the report even if the disposal takes place after the new Regulations have come into force.

Implementation of some of the charity land changes has now been put back to the third phase (due in by the end of this year). This includes the changes to the statements and certificates to be included in property contracts and deeds – the delay is to allow time to liaise with the Land Registry. The delayed provisions also include the changes around the exceptions to the provisions on disposing of and mortgaging charity land for liquidators and certain others.

Permanent endowment

The rules on spending permanent endowment are changing. The current Charities Act 2011 contains statutory powers which allow trustees to decide to spend permanent endowment in certain circumstances. Whether Charity Commission consent is required to the trustee decision currently depends on the income level of the endowment and its market value. Under the new regime, the income test is disappearing and the market value threshold is increased so that Charity Commission consent will only be required where the market value of the endowment is over £25,000. The procedure and rules on when a trustee resolution to spend permanent endowment takes effect is also changing.

Two new statutory powers are also coming in; power to borrow from permanent endowment and power, when charities have opted into the total return regime, to use permanent endowment for social investments. There’s also a new definition of permanent endowment.

Charity names

The new rules will extend the Charity Commission’s powers in relation to charity names. The Charity Commission will be able to direct a charity to change its working name (not just its legal name, as now) in certain circumstances including where the name is too like the name of another charity or is offensive and the new power will apply in relation to all charities, whether registered or not. The Charity Commission will also have a new power to delay registration of a new charity or a change of name by an existing charity where it has made a name change direction.

If you have any questions on the new changes and how these may affect you, please contact Jamie Huard or Laura Soley (and Mat Healey for charity names) at Bates Wells.