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Financial Thresholds in the Charities Acts - Proposals for Change

This was a joint consultation by the Office of the Third Sector and the Charity Commission, reviewing the regulatory and reporting thresholds in the various Charities Acts. The proposals were designed to achieve proportionate regulation, balancing the need to minimise regulatory burdens whilst maintaining a sufficient level of transparency and accountability.

Background

The Charities Act 2006 was a significant development for the charity sector modernising the regulatory framework in which charities in England and Wales operate. During the legislation's passage through Parliament, the Government committed to review all regulatory and reporting thresholds in the various Charities Acts. The publication of this consultation paper fulfils that commitment.

Details of the proposals

The 2006 Act has already raised a number of regulatory and reporting thresholds for charities, and simplified the framework. For example, several thresholds that applied to both income and expenditure were changed to refer only to income.

But the income figures for most thresholds have not been changed, even to account for inflation, since their introduction in the mid 1990s during the staged implementation of the 1993 Charities Act. Inflation alone would argue for increasing, for example, a £10,000 threshold to around £14,500.

The review also reflects a greater focus on risk and proportionality than was taken at that time. While this does not mean that small charities should be exempt from all regulation, the review proposes a lighter touch approach to routine regulatory and reporting requirements for small charities. We believe that the application of a proportionate and risk based approach is a strong argument for change, without a loss of regulatory confidence.

However, we are keen to hear the views of all those with an interest in charity regulation; charities themselves, funders from the statutory and charity sector, other stakeholders, and members of the public. The comments we receive will be carefully considered before any decisions are made.

Questions in the consultation

Questions in the consultation include:

• Do you think that the overall package of recommendations in this paper strikes the right balance between reducing the burden on charities and the effective regulation of charities?
• Do you think that our overall approach goes too far? If you do, would you say that the current thresholds should be retained or do you believe that there is a case for reducing them? If the latter, what thresholds would you suggest?
• Registered charities with income over £10,000 must send their annual accounts to the Commission. Do you agree that this £10,000 threshold should be raised? If you do, is £25,000 the right figure?
• All registered charities must prepare a Trustees Annual Report (TAR). Do you agree that a TAR preparation threshold should be introduced to ease the burden on small charities? If you do, is £25,000 the right figure, or should the level be the same as the registration threshold (£5,000) or another figure such as £10,000?
• Charities with income over £100,000 must prepare accruals accounts. Do you agree that this £100,000 threshold should be increased? If you do, is £250,000 the right figure?

The full list of questions is available in the consultation document.

Consultation document

• Financial Thresholds in the Charities Acts - Proposals for Change [PDF, 377KB]

Response to the consultation

The consultation ended on 31 March 2008, and the Government published its response on 28 August 2008:

• Government response to the Financial Thresholds in the Charities Acts consultation [PDF 120KB]