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This was the question that Jo Coleman, charities partner at Womble Bond Dickinson, addressed at our webinar on 14 January.

Various legislative and regulatory updates affecting the charity sector in the UK are expected to come into effect this year, against a backdrop of broader economic and political factors influencing the landscape in 2025.

Charities Act 2022 Implementation

The final provisions of the Charities Act 2022 will be implemented, allowing charities to make ex gratia payments without Charity Commission approval up to a certain financial limit where the trustees feel they have a moral obligation to do so. The test for making these decision is also to change from a subjective to objective test enabling delegation of decision making from the Trustees to the executive team.

Law Commission's Recommendations

The Government will review financial reporting thresholds for charities this year. Audit thresholds are expected to rise.

Charity Governance Code

The Charity Governance Code is under review following a public consultation and consultation with the Charity Law Association's working group on the Code to which WBD contributed. The new Code is expected to be published soon, and is hoped to make the application of the code more accessible to small and medium charities.

Charity Investment Governance

The Charity Finance Group established a cross sector working group which has just published its Charity Investment Governance Principles Guide following the case of Butler-Sloss & Ors v The Charity Commission for England And Wales & Anor [2022] EWHC 974 (Ch) (29 April 2022) and building on the Charity Commission's guidance Investing charity money: guidance for trustees (CC14) - GOV.UK giving practical examples of how to tackle governance challenges in relation to investment decisions and follows the same format as the Charity Governance Code (a voluntary code of practice).

Economic Crime and Corporate Transparency Act 2023 (ECCTA)

ECCTA aims to prevent the abuse of UK corporate structures and reduce economic crime, with new regulations affecting charitable companies, charity's trading subsidiaries, and corporate trustee companies. It received royal assent in October 2023 and is being enacted in tranches. In short, the changes brought about by the ECCTA will mean that

Companies House will take on more of the role as a regulator rather than simply an information repository supported by

• the requirement for all new and existing directors, Persons with Significant Control (PSCs) and those making filings to Companies House, will need to complete ID checks and verify their identity with Companies House from the Autumn.
• online only filing and changes to accounts for small and micro-entity companies (there will no longer be the option to file "abridged" accounts) – implementation is expected by the end of 2026.
• new provisions to enhance and standardise the "required information" that must be maintained on the company registers. We are waiting for guidance to be issued to clarify whether these changes will also apply to guarantee companies and their members. If they do, then charities with a broad membership base will need to ensure that their CRM systems are set up so as to allow the requisite statutory information to be recorded.
• individuals will be permitted to apply to suppress certain information from historical documents where they are at risk of physical harm/violence as a consequence
• the changes will apply to all charitable companies, trading subsidiaries and corporate trustee companies. 
• There is also a new Failure to Prevent Fraud offence which will apply to large companies and will apply to other incorporated entities including CIOs, Royal Charter Bodies and Community Benefit Societies. See further details in our article here.

Fundraising Regulator's Code Update

The Fundraising Regulator is updating the Code of Fundraising Practice. It is expected to be launched in April or May 2025, with a six-month transition period. The intention is to:

• Move to more of a principles-based framework
• Have fewer prescriptive rules in the Code
• Refer more to other regulators' guidance
• Make the code much shorter (apparently the new Code will have 45% fewer words than the existing code) and
• Make the code easier to use

There will be new rules in the Code on:

• Unstaffed collections (e.g. contactless payments, top-up donations and collection bins)
• Fundraising platforms
• Engaging with the Fundraising Regulator
• Paying fundraisers.

Non-Profit Sector Vulnerability Review

The Charity Commission is reviewing the UK's Non-Profit Organisation sector's vulnerability to terrorist financing, with a consultation closing at the end of the month.

Civil Society Covenant

In October the Department for Culture, Media and Sport published its consultation on the Civil Society Covenant which sets out the way in which the new Labour Government wants to work with the sector. It is based on 4 high level principles:

• Transparency – to ensure that both have the information that they need to serve people and communities
• Recognition – to ensure a strong and independent civil society
• Partnership – to ensure effective service delivery and policy making and shared learning of best practices
• Participation – to ensure that people and communities can be heard and make a difference.

The NCVO led on galvanising the Commission's response and there has been a high level of engagement generally with the consultation.

We await the next steps with interest.

The Procurement Act 2023 

This will change local authority's procurement practices.

The Digital Markets, Competition and Consumers Act 2024

 This will make key changes to consumer law to tackle online protections for consumers. Of note to charities are the changes to subscription contracts.

Employment Law changes

There are a number of new employment related acts and bills which are likely to impact charities addressing matters such as minimum wage, family friendly payments fire and rehire practices, National Insurance and neonatal care, zero hours contracts, day one employment rights, trade unions and industrial action and equality rights and employers' duties. Further details can be found in the latest episodes of our 'HR Moments' podcast series here.

The above is set against a backdrop of the Government's push for growth amidst a cost of living crisis, immigration challenges, and external factors such as world economic markets, wars, and the return of Trump's administration, all of which add a level of uncertainty to the mix.

Look out for our Charity updates on how this plays out as the year unfolds!

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.

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