Charities Act 2022: Ex-gratia Payments – What the November 2025 Changes Mean for Trustees

Implementation of the Charities Act 2022 will finally be completed on 27 November, with the commencement of long-awaited new provisions relating to how charities handle ‘ex-gratia’ payments. These changes introduce welcome additional flexibility for trustees.

Under the existing regime, any charity seeking to make an ‘ex-gratia’ payment - a payment that goes beyond its legal obligations but which the trustees consider they are under a moral obligation to make would typically need prior permission from the Charity Commission. This has often been cumbersome and disproportionate, particularly in cases involving relatively small sums.

A typical example is where a charity receives a legacy gift under a Will, but then evidence comes to light that the amount received is larger than the deceased person really intended because of a legal technicality or an oversight on their part. As a result, others will be deprived of money or property which the testator intended they should receive.

New power to make some ex gratia payments without Charity Commission consent

With effect from 27 November, charities will be able to make small ex-gratia payments without Charity Commission consent, subject to limits on the maximum amount that can be paid depending on the annual income of the charity. Depending on a charity's income, the limits range from £1,000 per payment for the smallest charities up to £20,000 per payment for those with income over £1 million.

Delegation of Decision-Making

Trustees can also now delegate decisions about ex-gratia payments. Rather than trustees personally making every decision, they may appoint staff or sub-committees to assess whether a moral obligation exists. Most importantly, even when the decision is delegated, trustees remain ultimately responsible for the decisions made.

This assessment must be made based on an objective test, where there is no legal power to make the payment, but “in all the circumstances the charity trustees could reasonably be regarded as being under moral obligation” to do so.

The new rules do not apply to certain cultural assets held by certain major national museums and galleries.

Preparing for the 2025 Changes

For further information or advice, please get in touch with our Charity & Social Enterprise Team.