What might we expect in charity law in 2025?

This blog post covers charity law changes in 2025, including new codes, tax changes, and reforms impacting charities and companies.

Welcome to the new Wrigleys Charity law blog, with updates on the latest and upcoming developments and insights in charity law and governance.  In this issue, we highlight some of the changes likely to impact on charities in the year ahead (and a bit beyond).  You will see from what follows that there is a lot coming our way …

New year, new Covenant and Codes

Expected soon in 2025 is publication of the new Civil Society Covenant as well as revised versions of the Code of Fundraising Practice and the Charity Governance Code.

The Civil Society Covenant is an innovation of the new Government, a ‘new beginning’ announced last year as ‘a new agreement to improve and reset the relationship between civil society and government’ and a priority of the Prime Minister.  A listening exercise led by DCMS, NCVO and ACEVO was held in late 2024 to inform the new Covenant.  We will be exploring how senior leaders can engage with the Covenant to benefit their charities in our series of Charity Leadership Forum events in February and March.  The events will be held at Leeds, Sheffield, Kendal and Newcastle and further details can be found on our "A Civil Society Covenant - here we go again?" event page.

The new Code of Fundraising Practice will, following extensive consultation, be quite a change from the current Code.  As a result, we can expect a period of implementation to enable charities and fundraisers time to update their training and processes. 

As well as getting to grips with an updated Charity Governance Code (CGC) when published, charities which are companies should also be aware of a new Code of Conduct for Directors published by the Institute of Directors in October 2024.  It is expressly applicable to directors of organisations ‘of all sizes’ including in the ‘not-for-profit sectors’ and is designed to complement other codes, such as the CGC.  Like the CGC, it is principles-based and intended as a practical tool.  It is also voluntary although, as for the CGC, it sets an expectation of a level of conduct against which a charity trustee may find themselves measured.

New taxes and tax changes

Independent schools will already be feeling the effects of new tax changes with the imposition of VAT on fees from 1 January 2025.  Those which are charities in England and Wales also face losing their entitlement to charity relief from business rates from April 2025.  Both moves could set a worrying trend, for the education sector and charity sector, on the risk of an erosion of tax reliefs/exemptions which are not assuaged by other changes expected in 2025.

April will also see the imposition of the new increases in employer NICs, which NCVO has estimated will cost the sector an addition £1.4bn.  Moves to exempt charities from the rise have failed so far.  There has been some limited respite with the announcement of a £100m boost for the hospice sector in December 2024, but concerns continue to be raised, including from hospices, over how charities affected by the NIC increase will be able to mitigate the impact.

Also expected during the year will be a consultation on draft legislation to make a number of changes to charity tax reliefs and exemptions, as well as filing responsibilities, after the 2023 consultation on Charities tax compliance and new Government’s response in October 2024. The changes would be due to take effect from April 2026.

Charity Commission

The Charity Commission has published its Annual Return Regulations which set out the questions and required information to be included in the revised annual returns from 1 January 2025 onwards.

The search will also be on for the next Chair of the Charity Commission, after Orlando Fraser KC announced that he will step down in April at the end of his current 3 year term.

We may also gain some insight into the workings of the Commission’s investigations teams with a judicial review set to be heard in March 2025 into the Commission’s Inquiry report into Kids Company.

Charities Act implementation and thresholds review

Some technical changes affecting colleges under the University and Colleges Estates Acts (UCEA) will come into effect in May 2025.  Meanwhile, the Implementation Plan for the Charities Act 2022 still refers to the final provisions (ss15-16 relating to ex gratia payments) being ‘expected to come into force later in 2024’. 

Similarly, the plan sets out the (former) Government’s commitment to commence in 2024 a review of the financial thresholds in the Charities Act 2011 to consider whether they should be increased in line with inflation, an important recommendation from the Law Commission’s charity law review.  It is unclear at present when the current Government will fulfil these commitments.

Company reform

Companies House is continuing its reform programme under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023), the ‘biggest changes in the role of the [Companies] Registrar since it was created in 1844’.  It has published a transition plan which is being updated as the timetable develops. 

A key change in 2025 will be the introduction of new ID verification (IDV) requirements for directors and PSCs, to be followed, likely in 2026, by IDV for those making filings on behalf of companies. 

The IDV process is due to come on stream around March 2025 and we expect IDV to start becoming compulsory for directors and PSCs for new incorporations and appointments by autumn 2025 (the timeline is not fixed yet).  At that time, for existing companies there will be a 12 month transition period as part of their confirmation statement process.  It will be important to be ready well in advance of the filing deadline – details of the IDV process can be found in the IDV process details.  Companies House expects to be able to allow individuals to start IDV voluntarily from 25 March.

In line with the introduction of IDV, we can expect to hear more about proposals for implementing a ban of corporate directors of companies and what exceptions will be permitted.  The previous Government accepted in its White Paper that non-company corporate legal forms, such as CIOs, should be within the exceptions, but it may still be that some charities may have to restructure once the ban comes in (which we would not expect to be until at least 2026).

Also under the ECCTA 2023, large companies and corporate bodies should prepare for introduction of a new offence of failure to prevent fraud which comes in from 1 September 2025.  The offence is designed to make it easier to hold large corporate entities (including charities) to account for fraud committed by their employees (or other ‘persons associated’).  Akin to anti-bribery legislation, it will be a defence to have ‘reasonable’ fraud prevention procedures in place.  Guidance on this was published in November 2024.

We can also expect further company reform with the announcement of ‘an ambitious consultation’ in 2025 on various matters including clarifying the law in relation to virtual AGMs.

Law Commission report - Charitable Community Benefit Societies (among others)

Following a comprehensive consultation in 2024 on Co-operatives and community benefit societies, the Law Commission has indicated that it expects to publish its report in 2025, which would include recommendations relating to charitable CBSs. see the  For further details on potential reform, see our article The Co-operative and Community Benefit Societies Act – preliminary ideas for reform.

Accounts and reports

Charities should be aware that the Charities SORP 2026 is due for consultation in March-June 2025.

There are also some changes coming in for smaller companies for financial years commencing on or after 6 April 2025 which should alleviate some of the reporting burden. 

Martyn’s Law – the Terrorism (Protection of Premises) Bill - update

Changes here are not imminent but will be wide-ranging.  This Bill is progressing through Parliament and should receive Royal Assent in 2025. 

The legislation would introduce requirements on those responsible for certain publicly accessible premises and events, including charities, to reduce the risk of physical harm to individuals at the premises, in the event of a terrorist attack occurring, with a higher level of duties for certain larger premises and events.  There will also be a new regulatory and registration regime to be overseen by existing regulator, the SIA (the Security Industry Authority).

The legislation will affect a vast array of charities and businesses nationwide and, as a result, it is expected to have a long implementation periodof around 2 years.  Charities will need to be prepared, but may find reassurance in the fact that the requirements are intended to be proportionate (along the lines of health and safety requirements).  It may also be useful to know that the CEO of proposed regulator, the SIA, is Michelle Russell who should have a good understanding of the concerns of the charity sector from her previous role as Director of Investigations, Monitoring and Enforcement at the Charity Commission.

Digital Markets, Competition and Consumers Act 2024 (DMCCA 2024) – changes due in 2026

Finally, the DMCCA 2024 which, among other things, will introduce new consumer protection requirements for subscription contracts.  Those requirements are not due to come in until around Spring 2026, but charities likely to be affected should plan well ahead to ensure they will be compliant.  Further details can be found in our article Major changes to UK consumer law are on their way: is your charity ready?

An unintended consequence of the legislation is that new requirements for a cooling-off period would conflict with Gift Aid rules for charities where, e.g., a membership fee is eligible for Gift Aid.  The Government has confirmed that it will amend existing Gift Aid legislation to address the point so that charities can continue to claim Gift Aid while complying with the new requirement.  Depending upon the detail of that solution, charities may need to make changes to their Gift Aid processes, but this is not imminent.