EXTENSION OF THE CHARITIES (EXCEPTION FROM REGISTRATION)
Questions and answers
What is the exception?
Why is the exception being extended?
The Charities Act 2006 (the 2006 Act) prevented the £100,000 threshold from being amended until the report of the statutory “five years on” review of the working of the 2006 Act was laid before Parliament. The report was laid in July 2012 and the Government published its formal response in September 2013.
The policy intention of the 2006 Act (since incorporated into the Charities Act 2011 (the 2011 Act)) is that the exception will come to an end, so that compulsory registration will apply to all charities, apart from a small number of exempt charities (a charity or group of charities listed in Schedule 3 of the 2011 Act). The requirement to register applies only to charities with an income above a set threshold, unless they are a charitable incorporated organisation, all of which must register regardless of their income.
The statutory review of the operation of the 2006 Act was carried out by Lord Hodgson of Astley Abbotts. In the review report Trusted and Independent: Giving charity back to charities3, Lord Hodgson recommended that:
1, the current general income threshold at which most charities must register should be increased from the £5,000 threshold to £25,000; and
2, the £100,000 threshold should be reduced first to £50,000 and then to £25,000 over a period of three years.
The three year period was suggested in order to help the Commission manage the impact of the compulsory registrations triggered by lowering the £100,000 threshold.
The charity sector’s response to the proposal to raise the general registration threshold was to oppose it on the basis that registration of small charities helps protect the reputation of charities as a whole, and that most small charities want to be registered. The Government accepted this and, in its response to Lord Hodgson4, indicated that it would not raise the £5,000 general registration threshold.
Not raising the £5,000 threshold means that many more charities will have to register when exception ends. Consequently the Government’s response took the view that now is:
1, not the right time to impose the burden of registration on smaller excepted charities at a time when many may be under pressure; or
2, to impose the burden of extra registrations on the Commission either, as its annual budget is reducing by a third in real terms between 2010 and 2015.
Why are you considering ending the exception?
In 2002, the Prime Minister’s Strategy Unit report “Private action, public benefit”5 stated that it did not believe that there was any continuing justification for retaining the exceptions and that these charities should be subject to the same registration and accountability requirements as other charities.
The report recommended that there should be no excepted charities. It also said that a higher income threshold could be set to “ensure a manageable process of registration”. The Government accepted those recommendations in principle and set the £100,000 threshold for excepted charities in the 2006 Act, with the intention of reducing it over time to the same level as for non-excepted charities, so ending the exception.
How will you work with excepted religious charities to prepare for registration in 2021?
Any further queries?
We hope that the information in this paper will address most of the concerns that will arise about this extension and the planning to end the exception at this time. If you have any further queries please e-mail David Hale at the Cabinet Office at email@example.com.