New regulations that trustees and staff of charities and community amateur sports clubs (CASCs) need to be aware of.

Various changes to charity compliance measures are expected to take effect from April 2026. In outline, these include:

• a stricter test for what are known as tainted donations. The tainted donation rules seek to deny tax relief where a donor obtains a financial benefit from the charity or CASC in return for the donation, either for themselves or someone else involved in the arrangement 
• approved charitable investments, so that all investments must be for the benefit of the charity and not for the avoidance of tax
• attributable income. The change here brings legacies within scope of the definition of attributable income, meaning they must be spent on the charity’s charitable purpose, or be subject to a tax charge.

The changes come as part of the government’s drive to close the tax gap, strengthen compliance powers, and challenge abusive arrangements. This means that though technically, all UK charities and CASCs and their donors are subject to the changes, in practice, the impact will only be felt by a few.

The current emphasis is on a defaulting minority. In the government’s words: ‘The majority of charities meet their tax obligations, but a small minority persistently fail to comply and yet still claim tax reliefs such as Gift Aid.’ To combat this, enhanced HMRC powers to compel tax compliance by sanctioning trustees and charity managers are in progress, and amended guidance on the Fit and Proper Persons test is expected imminently.

For the compliant majority, however, there is a more demanding compliance environment. The changes serve as a clear reminder of the need for timely filing of returns; accurate record keeping; and meticulous processes around Gift Aid. Please call on us if we can be of assistance in any of these areas.