Regulator updates guidance after legislative changes on ‘moral payments’
Source: gov.uk (2025-11-27)

Changes to charity law, implemented by the Government today (27 November 2025), should mean fewer charities will be required to ask for the Charity Commission’s authority to make moral (‘ex gratia’) payments.

From today charity trustees have new powers when considering if there is a moral rather than legal obligation to transfer some of their charity’s property.

Few charities ever face this situation, and payments typically relate to legacies where there is evidence that a person’s will does not reflect their final wishes.

When considering if they should make a moral payment, trustees must now apply an objective rather than subjective test of moral duty; have the option to delegate the decision to staff; and may be able to self-authorise small moral payments.

To help charities work within the new legal framework, and only apply for Commission authority when needed, the charity regulator has updated its guidance for trustees (https://www.gov.uk/government/publications/ex-gratia-payments-by-charities-cc7/ex-gratia-payments-by-charities-cc7#what-is-an-ex-gratia-payment).

The regulator also encourages trustees to refer to its general guidance on decision making (https://www.gov.uk/government/publications/its-your-decision-charity-trustees-and-decision-making) (CC27) when considering a moral payment.

Key changes to moral payments, which apply from 27 November 2025, are:

objective legal test: the previous subjective test, which required trustees to personally feel a moral obligation, has been replaced. The new test is objective, requiring that the trustees could reasonably be seen as being under a moral obligation

self-authorisation: charities may not need to seek permission from the Charity Commission for small moral payments, provided specific criteria are met

scaled financial limits: the maximum amount a charity can pay without the Commission’s approval is based on its gross annual income from the previous financial year. Payments above this financial threshold still require Charity Commission authorisation

delegation of decisions: trustees can delegate the authority to make moral payment decisions to staff or committees, though trustees remain ultimately responsible

Whether or not these powers are available in relation to any proposed payment depends on the individual case and charity. For example, the new statutory powers may not apply if a charity’s governing document or legislation explicitly restricts it.

For some specific national charities, mainly museums and galleries, their governing legislation prevents them making moral payments relating to property in their collections. The new changes do not affect this position. They will, though, be able to make small moral payments below the relevant financial thresholds from other assets without Commission authority, or above the thresholds with Commission authority.

The new powers cannot be applied retrospectively, so any application already made to the Commission for permission to make a moral payment will be considered under the previous legislation.

Charities should apply to the Commission for consent only when needed. The regulator will continue to assess each request for authority on its own merits: checking if a reasonable decision has been made by the charity and its trustees have complied with their legal obligations.

Christine Barker, Head of Regulatory Authority at the Charity Commission, said:

Few charities ever face decisions over ex-gratia payments, but for those that do, these legislative changes provide greater clarity and flexibility and allow them to make in-house decisions for small sums.

Our updated guidance is designed to help charity trustees know how to apply the law and whether they need to apply for our permission.

ENDS

Notes to editors

The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society. Read further information about what the Commission does (https://www.gov.uk/government/organisations/charity-commission/about).

This is the final provision in Charities Act 2022 – designed to reduce the legislative burden on trustees – to come into effect. The Commission’s guidance on all the changes to charity law introduced by the Act can be found here (https://www.gov.uk/guidance/charities-act-2022-guidance-for-charities). The Act itself can be found here (https://www.legislation.gov.uk/ukpga/2022/6/part/1/crossheading/ex-gratia-payments-etc/enacted), and more detail on how the Act has been implemented by the Government – including a link to the latest commencement regulations – can be found here (https://www.gov.uk/guidance/charities-act-2022-implementation-plan#provisions-of-the-act-expected-to-come-into-force-autumn-2022).

The Charity Commission reports on its use of its regulatory authority powers quarterly: Casework and registrations data: April to June 2025 - GOV.UK (https://www.gov.uk/government/publications/charity-commission-casework-and-registrations-data-2024-to-2025/casework-and-registrations-data-april-to-june-2025#regulatory-authority-cases).