Charity Commission changes to exempt charities

Changes arising from the Charities Act 2006 continue to affect exempt and non-exempt charities, writes Victoria Spratt, a solicitor in Hewitsons charities team.

The Commission has updated its guidance on the changes made to the regulation of exempt and excepted charities, to include further information on some of the transitional provisions, in particular in relation to accounts and land transactions.

Charities usually fall into one of two categories, 'exempt' and 'non-exempt'.

- 'Exempt' charities are not regulated by the Charity Commission, and are exempt from registration with the Commission and certain provisions of the Charities Act 1993.
- 'Non-exempt' charities are regulated by the Commission and must comply with all the relevant provisions of the Charities Act 1993. They usually have to register with the Commission when their income exceeds £5,000 in any one year, but certain categories of non-exempt charities, called 'excepted charities', are not required to register with the Commission unless their income exceeds a far higher sum in any one year. Historically, some charities were also excepted regardless of income levels, such as certain church denominational charities.
As a result of the provisions of the Charities Act 2006, unless a 'principal regulator' is identified and agreed by the Commission to take on the additional role of charity regulation, previously exempt charities will now need to register with the Commission. Thus, resulting in the number of exempt charities being considerably reduced.
For example:
- Foundation schools lost their exempt charity status in January 2009, but were also excepted from registration unless their income exceeded £100,000 in any one year. However, it is now proposed that exempt charity status be re-conferred on foundation schools in England, with the Secretary of State for Education appointed as their principal regulator. The details of these arrangements are still under discussion.
- Oxford and Cambridge colleges lost their exempt status and have been required to register with the Commission since 1 June, if their income exceeds £100,000 in any one year. Registration has been under discussion between the Colleges and the Commission for some time.
- Changes still to be fully implemented will affect charitable industrial and provident societies (except where they are regulated providers of social housing, where the Tenant Services Authority will act as principal regulator), many churches, scouts and guides groups, and armed forces charities.
- The 'academy trusts' in relation to the new type of academy schools will be exempt charities. However the trusts for existing style academy schools are not exempt and it remains to be seen how this anomaly will be resolved.
Transitional protections have now been put in place to assist some formerly exempt charities, so that they continue to be treated as though they were exempt charities in respect of certain requirements of the Charities Act 1993. The guidance can be found at: Charity Commission Website

If your charity is affected by the changes, and you would like to discuss the new requirements, please contact Victoria Spratt on 01604 233233 or at victoriaspratt@hewitsons.com