Wrigleys charity law Update – What to expect in charity law in 2026?

In this update, we look ahead to some of the legal developments which charities can expect in 2026 and a little beyond.

Charity Commission

The Charity Commission starts the new year with its new Chair, as Dame Julia Unwin takes up the position after being appointed by the Secretary of State for Culture, Media and Sport in December 2025.  Dame Julia’s appointment will be for 3 years starting on 1 January 2026.

Also starting at the Charity Commission in January is its new Director of Legal and Accountancy Services, Jan Lasik.  He joins from the charity sector having previously been General Counsel and Secretary of the National Trust.  His role will include oversight of the Commission’s legal teams responsible for advising on, among other things, registration, compliance and enforcement.  His team will be supporting the Commission’s commitments to ‘support charities to get it right but take robust action where we see wrongdoing and harm’.

In 2026, we should also expect to start seeing the impact of increased funding which the Commission won in the most recent Spending Review.  The Commission indicated at its 2025 Annual Public Meeting that it would be recruiting more case officers and making improvements in its use of technology and data.

We are also expecting updates to Commission guidance in 2026.  These are likely to include refreshed versions of:

• CC20 Charity fundraising: a guidance to trustee duties

• CC29 Conflicts of interests: a guide for charity trustees

• CC26 Charities and risk management 

The Equality Act: guidance for charities

The Equality Act guidance is likely to be reviewed once updated guidance from the EHRC (Equality and Human Rights Commission) is approved by Parliament, following the 2025 Supreme Court decision on the definition of ‘sex’ in the Equality Act 2010 (see our article Supreme Court clarifies ‘sex’ definition in Equality Act 2010 for more detail).

We may also see a consultation during 2026 on potential new or increased powers for the Commission.  In Parliament in November 2025, Baroness Twycross, Minister of State at the DCMS, confirmed the Government ‘will consult in due course’ on new powers.  She referred specifically to new powers for automatic disqualification of individuals convicted of hate crimes from serving as charity trustees or senior managers.  However, there was reference to a ‘number of measures being considered’, some of which would not require primary legislation, while other proposed changes might.  Civil Society has reported its understanding that a consultation will be launched in ‘early 2026’.

Charities Act implementation – ex gratia (or moral) payments

Another change for both the Charity Commission and charity trustees is already in place but likely to be made use of from 2026, namely the changes introduced from 27 November 2025 to the rules on making ‘ex gratia’, or moral, payments.

There is now a new statutory test for making or authorising an ex gratia payment.  It is an objective test, that in all the circumstances the charity trustees could reasonably be regarded as being under a moral obligation to make the ex gratia payment. 

Charity trustees can also now (subject to any restrictions or exclusion in the trusts of their charity) make decisions on smaller ex gratia payments (within prescribed limits) without Charity Commission authority.  Charity trustees can delegate their authority to make decisions on ex gratia payments (but remain responsible for them).

There are currently some exclusions from the new rules for certain property of 16 statutory charities (such as the British Museum), because some of the provisions have not (yet?) been implemented. 

Details on using the new powers, as well as the exclusions, are set out in the Charity Commission’s guidance CC7 How charities can make a moral, or ‘ex gratia’, payment.

English (or Scottish) charities operating in Northern Ireland – new Charities Amendment Bill

Charities which operate in Northern Ireland but are not established there, so-called ‘s167 institutions’, should be aware that the Department for Communities in Northern Ireland is planning to publish a Charities Amendment Bill, likely early in 2026, which is intended to include provision for implementing some level of regulation and/or registration of s167 institutions.

The Bill should be open for consultation, so charities which may be affected should have the opportunity to comment.

Civil Society Covenant

The Civil Society Covenant was published in July 2025 and presented as a new principles-based arrangement for re-setting the relationship between UK Government and civil society (see our article here).  We should expect to see further development of the Covenant in 2026, including the work of the new Civil Society Council, led by Kate Lee, CEO of NCVO, which will meet quarterly in Downing Street acting as an advisory body to Government.

Data protection – new soft opt-in for charities

A new charitable purpose soft opt-in for electronic marketing (introduced under the Data (Use and Access) Act 2025 (DUAA)) is due to be brought into effect around January 2026.  The soft opt-in will make it easier for charities to send marketing to donors and supporters by email and text, subject to various conditions. 

The ICO consulted on its proposed approach in October-November 2025 and, at time of writing, we await its response to that consultation.  The Fundraising Regulator submitted a response in which it confirmed that it also intends to publish a resource for charities using soft opt-in for fundraising marketing purposes in early 2026.  In the meantime, for more information on the changes under the DUAA, please see our article, Data (Use and Access) Act 2025: an update to data protection law - what charities need to know.

Company reform

Companies House continues 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’.  The scale of the implementation means it is taking place over an extended period, expected to complete around 2027.  The Companies House transition plan is being updated as the implementation timetable develops.

A key change introduced in 2025 was the introduction of new ID verification (IDV) requirements for directors and PSCs (people with significant control).  From 18 November 2025, IDV became mandatory for new directors and PSCs (and members of LLPs) and a period of transition started for existing directors (and PSCs and members of LLPs) which will carry on into 2026. 

In particular, company directors should be aware that they will need to be ID verified before their company’s next confirmation statement needs to be filed.  Directors can check their company’s register entry on the Companies House website to see when their IDV is due, but should take steps to complete the process well in advance of that date in case of any difficulties.  The process is free – full details are available on the Companies House website: Verify your identity for Companies House - GOV.UK

IDV was due to be extended in spring 2026 to those making filings on behalf of companies, but that extension has been postponed until at least November 2026.  Companies House has recently moved its online filing services to GOV.UK One Login, requiring those filing to create a GOV.UK One Log-in if they do not already have one – this is part of a general move across online government services (eventually replacing Government Gateway). When the extension of IDV to those making filings is brought in, it  will be an additional requirement which will be specific to Companies House filings.  Charities which are companies, or which have companies in their structure, should be aware of these changes so they can make appropriate arrangements to ensure they can continue to make filings at Companies House. 

In due course, we also expect to hear more about proposals for implementing a ban on 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.  The permitted exceptions are likely to depend upon IDV, so we may hear more later in 2026 once IDV is better established.

After an announcement in 2024, we expected ‘an ambitious consultation’ in 2025 on various company reform matters, including clarifying the law in relation to virtual AGMs.  After stakeholder engagement over Summer 2025, it has been stated that the Government ‘has listened and expanded the scope of its reforms’, now framed as the ‘Modernisation of Corporate Reporting’ programme.  It stated that a ‘broad consultation will be delivered in 2026’.  It is hoped that the consultation will still include the proposals for modernisation of company law promised previously.

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

The DMCCA 2024 will, among other things, introduce new consumer protection requirements for subscription contracts.  It has been confirmed that those requirements will not come in until Autumn 2026 at the earliest.  This is later than originally planned, in recognition that those affected need more time to prepare.  Charities which may be affected should plan well ahead to ensure they will be compliant.  Further details can be found in our article here.

Another issue for charities from the legislation is that new requirements for a cooling-off period would conflict with Gift Aid rules where, e.g., a membership fee is eligible for Gift Aid.  The Government 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.  However, the technicalities have been proving difficult and the latest assurances from Government have been less committed about changes to legislation, albeit still repeating the Government’s intention that charities will be able to continue to claim Gift Aid (as also reported recently in Civil Society).  In the meantime, HMRC has amended its detailed guidance on Gift Aid to introduce a new paragraph 3.13.4 which sets out HMRC’s ‘interim position’ that a refund required under consumer protection law is ‘not a condition as to repayment for Gift Aid purposes’.  HMRC’s amendment to the guidance is helpful but is not a substitute for legislation, so it is hoped that we will see legislation to confirm the position before the DMCCA changes are brought into force.

Are charity trustees ‘workers’ and, if so, in what context?

Also expected in 2026 is an employment tribunal decision in the case of MacLennan v British Psychological Society. 

The case is considering whether a volunteer charity trustee may be a ‘worker’ for the purposes of qualifying for protection under whistleblowing legislation.  If the tribunal decides that a charity trustee is a ‘worker’, it could have implications for charities generally, in relation to whistle-blowing protections but also potentially in the context of wider employment rights.

Employment Rights Act 2025

On the subject of employment, the Employment Rights Act 2025 received Royal Assent just before Christmas and the Government published comments from charities, among others, welcoming the legislation.  Charities with employees will need to understand how it is likely to affect them ahead of its implementation, which is likely to start around April 2026 but go on well into 2027.  For a guide to key points in the Act, see our article Employment Rights Act 2025 – key points employers need to know now.

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

The Law Commission is in the midst of a review of the law governing co-operatives and community benefit societies, including a comprehensive consultation in 2024 in which members of our team participated, together with ongoing dialogue.  The Law Commission has indicated that it expects to publish its report in 2026, which would include recommendations relating to charitable CBSs.  See here for further details on potential reform.

Charity tax changes

Charities may be hoping for some quieter times on the tax front after the significant changes in 2025, which saw the increases in employer NICs and, for charitable independent schools, the imposition of VAT and removal of charity rates relief.  However, more change is due in 2026.

The Finance Bill contains a number of changes for charity tax, most of which were expected having been the subject of previous consultations.  The changes are expected to take effect from April 2026. 

Three changes arise from a 2023 consultation on charities tax compliance.  These changes relate to:

• the Tainted Charity Donation rules, designed to prevent purported donors obtaining tax relief where they obtain a financial advantage as a result of their donation.  The test here will change, so that:

  • HMRC will look to the outcome of the transaction, not just the donor motivation, to determine whether a donation is tainted; and

  • the bar for establishing whether a transaction is tainted will be lowered by replacing the test of ‘financial advantage’ with ‘financial assistance’.

  • Approved charitable investments – for charitable tax relief purposes, these will become subject to a requirement that the investment is made for the sole purpose of benefiting the charity (or for that purpose and one or more ancillary or incidental purposes) and not for the avoidance of tax (whether by the charity or any other person).  HMRC say that this will ‘simplify the rules’.

  • Legacies to charities (or CASCs) – will be brought within the definition of attributable income, so that the legacy must be spent on the charity’s charitable purpose, otherwise it may be subject to a tax charge.

In addition, an anti-avoidance provision is included in the Bill which was announced in the Budget 2025.  It will restrict the charity exemption from IHT to gifts made (directly) to UK charities and CASCs.  The aim is to prevent the relief being claimed on gifts to bodies which are not recognised as a charity (or CASC) for tax purposes under the test applied by HMRC, in line with other charitable tax reliefs. 

A welcome change is likely to be the inclusion of a new VAT relief for donations of goods by businesses (although with restrictions).

We may also see further consultation from HMRC during 2026 on proposals to introduce sanctions for charities (and CASCs) which persistently fail to meet their filing and payment obligations and, potentially, to tighten the rules on gift aid declarations to require the donor’s ‘full’ name. 

In relation to tax returns, charities should not ignore a letter from HMRC requesting the charity to submit a return.  In particular, charities should be aware that penalties for late filing of corporation tax returns will double from April 2026.

Accounts and reports

The new Charities SORP will apply for financial periods starting on or after 1 January 2026, so the first accounts under the new SORP will be those with a year-end of 31 December 2026.  Charities whose accounts are subject to the SORP should take steps now to familiarise themselves with the changes and to consider what information they may need to collate in coming months ready for their first accounts under the new SORP.  Information is available on the SORP homepage, as well as on sites such as the Civil Society SORP Hub.

On wider reform of the audit market and corporate reporting, we should expect a consultation on proposals around a long-planned Audit Reform and Corporate Reporting Bill.  In September 2025, the Minister for Employment Rights, Competition and Markets wrote a letter to the Chair of the Business and Trade Committee on the proposals, which may, among other things, include increased scrutiny for company directors.

Revised financial thresholds in charity law

After a consultation in 2025, a number of financial thresholds are due be updated with effect from 1 October 2026.  The changes will be accompanied by updated Charity Commission guidance.

The main changes relate to an increase in a number of the thresholds (in England and Wales) relating to accounts and audit.  The small remuneration thresholds in fundraising legislation will also be increased, alongside those for donation refund requests.

While there were a number of pleas for alignment and simplification of thresholds, it was not possible to achieve this, so charities will still need to grapple with different thresholds depending upon legal form and different parts of the UK.

And preparing for 2027 - Martyn’s Law, the Terrorism (Protection of Premises) Act

This legislation will introduce requirements on those responsible for certain publicly accessible premises and events, including charities, to take steps to reduce the risk of physical harm to individuals at the premises in the event of a terrorist attack occurring, imposing 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 is not due to be brought into effect until at least April 2027.  However, charities should consider now whether they will be within scope of the Act and, if so, how they may be affected.  Government factsheets are available and there is free guidance and learning available on the Prevent UK website.  The Home Office has also published a useful Myth Buster guide.  The CEO of the SIA, Michelle Russell (who previously worked at the Charity Commission) recently published an update on their preparation for their new regulatory role.

Guidance from both the Government and the SIA is due to be published, hopefully some time in 2026, which will provide more detail on the steps likely to be required.  At this stage, charities should, if they have not done so already, identify if they are in scope of the legislation (and, if so, at what level).  They should also review what processes they have in place already to protect people and what information they may want to gather now to help them comply once the detailed guidance is available.

As can be seen, there is no let up in the volume of legal and regulatory changes coming our way in the next year or so.  While some of these offer some welcome deregulation and, hopefully, with the Civil Society Covenant new opportunities, there is also a tilt towards increased regulation and scrutiny.  It will remain important, therefore, for charities to keep a weather eye on their governance to ensure it is fit to support the charity through the changes to come.

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If you would like to discuss any aspect of this article further, please contact the Charities and Social Economy team on 0113 244 6100.

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The information in this article is necessarily of a general nature.  The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice, please feel free to contact Wrigleys Solicitors.

How Wrigleys can help  Wrigleys Solicitors is a specialist charity and private client law firm with a dedicated Charities and Social Economy team that advises hundreds of charities and not-for-profit organisations. As one of the leading charity law practices in the UK, and one of the few firms with lawyers working exclusively for charity and social enterprise clients, we are recognised as experts in our field. We provide practical, common-sense, and technically excellent advice, forming valued long-term relationships with our clients. If you or your organisation require advice on this topic, get in touch.