Regulator clarifies charity law on payments

The Charity Commission has announced new guidance following legislative changes effective from 27 November 2025, which grant charity trustees enhanced powers concerning moral payments, also known as ‘ex gratia’ payments. These changes potentially reduce the number of instances where charities must seek the Commission's authority before transferring their property based on moral obligations rather than legal requirements.

Traditionally, few charities encounter situations necessitating moral payments, typically related to legacies that do not align with a deceased person's genuine wishes. Under the new provisions, trustees are now required to implement an objective test regarding moral duty, departing from the previous subjective test that relied heavily on trustees' personal feelings of obligation. This shift enhances the clarity of decision-making processes for charities.

Furthermore, the updated regulations allow trustees to delegate the authority for making small moral payment decisions to staff or committees while ensuring trustees remain accountable. In addition, charities can now self-authorise small payments if they meet specific criteria, which includes a threshold based on their gross annual income from the prior financial year.

However, it's essential to note that these provisions do not apply retrospectively, meaning any applications already submitted to the Commission will be reviewed under the former legislation. For specific national charities, such as museums and galleries, the established governing legislation may still restrict the ability to make certain moral payments concerning their collections.

Christine Barker, Head of Regulatory Authority at the Charity Commission, commented that "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." The Commission has also urged charities to refer to its general guidance on decision-making, CC27, as they navigate these new powers. This regulatory update aims to streamline compliance processes and empower charity trustees in their decision-making regarding moral payments.