The Regulator for Charities in England and Wales

The Charities Act 2006

(Version April 2008)

What does the Charities Act 2006 mean for you and your charity?

In lots of areas it can make things easier for you and it unties some of the 'red tape' you've had to cut through in the past. In many cases it will be easier for you to change your charity's rules for calling meetings, making decisions or other parts of your charity's administration. There are more powers available to transfer property, replace the charity's purposes or to spend capital. It's also easier to pay trustees for some of the services or goods they provide for the charity.

Many of these things you can do without the need to come to us for our permission – that's partly how the Charities Act 2006 can help you. You can find much of the information and forms you need on the 'Apply for it' page.

What are the provisions of the Charities Act 2006?

  • A plain English guide, 'Charities Act 2006 – What trustees need to know', is aimed primarily at trustees of small, volunteer-led charities. However, it provides a useful guide for anyone wishing to gain a clear understanding of the Act's main provisions. This link takes you to an interactive version.

You can download a printable version of this guide in English, Welsh or large print or order a hard copy by visiting the Office of the Third Sector's website.

  • To see the text of the Act itself together with explanatory notes, visit the Office of Public Sector Information's website.

Provisions implemented in 2007

Many provisions were implemented during 2007 and the Office of the Third Sector has published a revised implementation plan which gives a full list of these. Some provisions which may have most impact on trustees include:

Provisions implemented in March 2008

Further provisions came into force on 18 March 2008. These deal with:

  • The Charity Tribunal – Provisions in the Act establish a further avenue of appeal for trustees wishing to challenge a legal decision of the Commission and this new body has been set up by the Tribunals Service.
  • Unincorporated charities– a range of powers is now in place which make it easier for trustees of unincorporated charities to:
  • change the administrative provisions of the charity;
  • change the purposes of the charity ;
  • transfer property;

in many cases without the need to come to us for consent. There is information about each of these areas and other topics available through the 'Apply for it'  page. Once there you will also find links to the appropriate declaration or application forms.

  • Charitable companies: amendments to governing documents – charities that are companies have already been able to make certain changes to their governing documents. The Act makes it easier for charities that wish to make such changes. You can find information about this in our operational guidance OG47 Alterations to governing documents: Charitable companies. For an information sheet and declaration form see the Apply for it page.
  • Power to spend permanent endowment – Depending on their circumstances, more charities will have the power to spend their permanent endowment .
  • Payments to trustees  – it is now possible for charities to pay trustees for goods and services they supply to the charity without the need for our consent if certain conditions are met. Information sheets and, where necessary, application forms are available on the 'Apply for it' page
  • Cy-près – provisions in the 2006 Act have introduced a more flexible cy-près regime and as well as honouring the spirit of the original intention of the gift to a charity, we will also take into account the social and economic circumstances prevailing at the time of the proposed alteration of the original purposes. We have amended our operational guidance OG2, Application of property cy-près, to reflect this.
  • Failed appeals - Fundraisers can now advise donors that if the appeal fails then their donation will be used for similar charitable purposes unless they have completed a declaration that they would rather be offered a refund. If the appeal fails, the organisers only need to contact those donors who signed declarations. The Commission can make a scheme for the remaining funds. We advise charities to try to avoid failure by careful wording in their appeals. For further information see OG53 Charitable Appeals: avoiding and dealing with failure.
  • The Commission's regulatory powers have been extended to include:
  • power to direct application of property;
  • power to direct trustees to take certain action;
  • power to suspend and remove trustees and officers from membership

We'll keep you fully informed should we need to use these powers in connection with your charity.

Provisions implemented in April 2008

  • New fundraising requirements – from 1st April professional fundraisers, commercial participators, staff and paid officials have to provide certain information when fundraising. The Office of the Third Sector has published their Draft Guidance on Professional Fundraising and Commercial Participation for consultation until 31 May 2008. For general guidance on fundraising, see Charities and Fundraising (CC20).  
  • Public Benefit – from 1st April, the definition of 'charity' in the Charities Act 2006 became law. The definition covers the public benefit requirement and lists purposes which can be charitable. We have published guidance about the public benefit requirement. We have also produced for consultation further guidance to explain in more detail how the public benefit requirement applies to charities for the relief of poverty, furtherance of religion and education and those that charge fees.
  • Accounting – new provisions came into effect for financial years beginning on or after 1 April 2008 affecting both charitable companies and non-company charities in connection with regulations covering:
        • Group accounts;
    • Whistle blowing; and
    • Harmonisation of audit and independent examination thresholds

For more information on this see the updated version of Charity Reporting and Accounting: The essentials April 2008 CC15(a). See also the page, SORP, Charity Accounts and Reports: What you need to know.  From 1st April auditors and independent examiners who identify matters of material significance in the course of their work have a statutory duty to make a report to the Charity Commission. We have prepared information for auditors on the making of such reports. Independent examiners should refer to CC31 Independent Examination of Charities' accounts. The website for the Office of the Third Sector provides a useful summary, and you will also find links to the relevant legislation that implemented these changes and to an informal consolidation of Part 6 of and Schedule 5A to the Charities Act 1993.

      Provisions due after that

      • Charitable Incorporated Organisations – we want to be sure that we get the regulations and the model governing documents right for this new form of charity. Our joint consultation with the Office of the Third Sector asking for comments on our proposals closed in December 2008. See our CIO page for full details.
      • Excepted charities - In October 2008 we started a programme to register voluntarily existing excepted charities with an annual income exceeding £100,000. On 31 January 2009 the part of the 2006 Act that makes it compulsory for those charities to register came into force.  Because of the large number of charities that will have to register, we have agreed a registration timetable for most religious excepted charities.
      • Exempt charities – From October 2009 the parts of the 2006 Act that specifically apply to exempt charities will start to come into force.  Eventually all exempt charities that are not subject to any other principal regulator and have an annual income over £100,000 will have to apply to us for registration.
      • You can find more information, together with the registration timetable for religious excepted charities and some frequently asked questions, by following the link to the Changes to the Regulation of Excepted and Exempt Charities page.
      • It will take time for us to register the large number of formerly excepted and exempt charities that we will have to register. Before the provisions that require us to register charities that apply for voluntary registration come into force, the current law enabling us to exercise discretion in relation to applications for voluntary registration will continue. Again, we'll provide more information when we have it.

How did this legislation develop?

Although the Act is now law, you may be interested in reading the background and development stages it went through on its way through Parliament.