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Charities Act 2011: Implementation of second tranche of 2022 updates including property and charity names

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By Anna Phillips, Andrew Mackie

25 May 2023 | 1 minute read

The Government has announced that the next tranche of sections of the Charities Act 2022 will be implemented in June 2023 (exact date still to be confirmed). 

The key provisions to be implemented in June are:

  • Sections 9 to 14 and 35(a) on permanent endowments.
  • Sections 17 and 19 to 22 on charity land.
  • Sections 25 to 28 on charity names.
  • Sections 38 and 39 on the definition of connected persons.

Summary of key provisions being implemented in June 2023

The key changes to be implemented are set out below, for more detail on the changes please see our previous article.

The changes being implement in June will introduce new statutory powers to enable charities in certain circumstances to do the following without Commission authority:

  • Spend from a ‘smaller value’ permanent endowment fund of £25,000 or less.

  • Borrow up to 25% of the value of their permanent endowment fund.

The changes will simplify some of the legal requirements which charities must comply with before disposing (including selling, transferring, or leasing) charity land, including:

  • Amending the definition of s.117 so that only land held by or appropriated to a single charity will be caught (and will require a s.119 Report).
  • Widening the category of designated advisors who can advise charities on disposals.
  • Providing trustees with more discretion on how to advertise a proposed disposal.
  • Removing the requirement to obtain Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy.

Importantly, however, changes to the certificates and statements which must be include in disposal documents will not be implemented until October 2023. Most frustratingly, this means that until the implementation date in October, where there is an appropriation to a single charity, that charity will still need to counter-sign the transfer (or other disposal document) to provide the certificate.  This will mean signature by either the trustees or those parties with delegated power on their behalf.

From June, the Commission will have the authority to:

  • Direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading.
  • Delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register.

 

The definition of a connected person will be updated to removed outdated language, particularly regarding illegitimate children.

Tranche 3 and further implementation of changes

The implementation plan has also been updated to confirm the third and final tranche of updates is now expected to come in to force by the end of 2023 (rather than autumn 2023 as previously expected).

Importantly, this will include the following provisions on charity land which we expected to see in the June update:

  • Section 18 on exceptions to restrictions on disposing of or mortgaging charity land (including dispositions and mortgages in insolvency cases).
  • Section 23 on making changes to information that must be included in statements and certificates for disposals and mortgages of charity land. 

Our comment

The Government has said that these provisions have been moved to the third phase of implementation to allow for consequential amendments required by HM Land Registry required because of these updates (including to the Land registration Rules 2003). 

We are also yet to see updated regulations under which designated advisers will be governed by when preparing a s119 Report but expect these will amended from the The Charities (Qualified Surveyors' Reports) Regulations 1992 in due course.  

Amendments to the Universities and College Estates Act 1925 will also be postponed from June and included in the commencement regulations due by the end of 2023 (coming in to force in Spring 2025).

Watch this space for further updates on the implementation plan and third tranche of changes in due.

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