Legal updates for charities: Autumn 2025

Autumn 2025 has brought significant regulatory changes for charities in England and Wales.

Three major publications require trustees' attention: the revised Code of Fundraising Practice (now in force), SORP 2026 (applying from January 2026), and the new Charity Governance Code (published 10 November 2025).

This update helps trustees and charity managers navigate these developments and understand what action to take.

1. Revised code of fundraising practice

What's new?

The new Code of Fundraising Practice came into force on 1 November 2025. This significant update requires charities' attention. Review your fundraising policies and practices now to ensure you’re in alignment with the new standards.

Key changes in the revised Code

Principles-based format

The Code has moved away from prescribing detailed rules for every scenario. Instead, it focuses on core principles and outcomes, making it simpler to navigate and more adaptable to modern fundraising methods. Organisations must exercise good judgement in applying these principles, with support guides available covering areas such as documenting decisions, conducting due diligence, and managing third-party partners.

ID badge requirements

The rules on identification for face-to-face fundraisers have been clarified. Fundraisers' ID badges must now include contact details either of the charity or of their third-party employer (not both), which simplifies compliance.

Processing fees

The Code refines guidance on handling processing fees, clarifying that standard transaction costs (such as routine card payment fees) are not treated as additional fees requiring special disclosure to donors.

Legacy fundraising

If your charity engages in legacy fundraising through recommended will-writing services, the Code now advises offering donors a choice of at least two different providers. This moves away from exclusive partnerships and helps avoid any perception of undue influence.

"Zero-tip" option on platforms

Online giving platforms must now provide a clear "zero-tip" option for donors. Previously, some platforms defaulted to suggested tips (often a percentage of the donation). Under the new Code, an easy, no-obligation tip option is mandatory. If your charity uses online fundraising platforms, check they comply with this requirement so donors can easily opt out of adding a platform "tip".

These changes uphold high standards whilst allowing flexibility for innovation in fundraising. All fundraising charities should familiarise themselves with the revised Code and adjust their fundraising policies, volunteer training and third-party contracts accordingly. 

The Fundraising Regulator has published support guides and practical tips to help charities meet the new expectations.

2. Changes to charity accounting (SORP 2026)

“The biggest overhaul to charity reporting in a decade.” 

Significant changes to charity accounting are coming. A new Statement of Recommended Practice (SORP 2026) will apply to reporting periods starting on or after 1 January 2026 – the biggest overhaul to charity reporting in over a decade.

Key changes

Tiered reporting

A three-tier framework based on charity income ensures that smaller charities face proportionate requirements whilst larger charities provide more detailed reports. The thresholds are: up to £500,000; between £500,000 and £15 million; and over £15 million.

Revised audit thresholds

The financial thresholds for requiring charity accounts to be examined or audited have been raised. Charities with income below £1.5 million may not need to have their accounts audited or independently examined.

Revenue recognition

A new five-step model for recognising income may affect when and how charities account for grants, donations and contracts.

Lease accounting

Changes will require most leases (such as property or equipment leases) to be shown on the balance sheet, similar to for-profit sector changes. This could significantly alter the appearance of charities' balance sheets if they lease premises or major assets.

Enhanced narrative reporting

There will be greater emphasis on the trustees' annual report discussing impact, reserves policy, sustainability and risks facing the charity. The aim is to improve transparency about how charities are governed and how they plan for the future.

Charities should start preparing now for these changes, particularly if your financial year will fall under the new SORP in 2026. Discuss with your finance team or auditors what changes in accounting policies might be needed.

3. Revised Charity Governance Code (2025)

What's changed and how to comply

On 10 November 2025, a new voluntary Charity Governance Code was published, replacing the 2017/2020 edition. The Code sets clearer expectations for trustees and introduces eight core principles (up from seven), including a new "Foundation" principle covering basic trustee duties and responsibilities.

Key changes

• Splitting decision-making and risk management into separate principles for clearer focus.
• Merging integrity and transparency into a single "ethics and culture" principle.
• Expanding diversity to "equality, diversity and inclusion".
• Adding focus on digital governance, environmental responsibility and learning culture.

The 2025 Code is unified for all charity sizes, with certain practices flagged as primarily for larger charities. It emphasises behaviours and outcomes rather than tick-box processes, including "what good looks like" indicators and expected trustee behaviours.

The Code remains voluntary and follows an "apply or explain" approach. Whilst endorsed by the Charity Commission as the sector benchmark, it serves as a tool for continuous improvement rather than a regulatory checklist.

Steps for compliance

Trustees should take these practical steps to align with the new Code:

Immediate actions

Brief all trustees on the new Code and conduct a gap analysis against the eight principles, paying particular attention to the new Foundation Principle covering basic trustee duties and conflict management.

If your charity is undergoing a governance review or restructuring, apply the revised Code from the outset.

Integrate new focus areas

Address modern governance challenges including environmental responsibility, digital governance and cybersecurity, and ethical investment alignment.

Foster a learning culture on the board through regular training and development.

Strengthen board dynamics

Encourage openness, constructive challenge and inclusive meetings. Consider adopting a board code of conduct and regularly assess board effectiveness.

Update governance documents including conflict of interest policies, board diversity policies and risk management frameworks covering modern risks such as cyber threats.

Demonstrate compliance

• Include a statement in your Annual Report explaining how you apply the Code and any improvements made or planned.
• Update trustee induction materials to include the 2025 Code alongside "The Essential Trustee" guide.

The 2025 Code builds on familiar principles whilst enhancing focus on foundational governance knowledge, modern risks and board culture. Charities should embrace it as a tool for continuous improvement to deliver their mission with integrity and effectiveness.

4. The Charity Commission

Key decisions and actions

The Charity Commission has remained active over recent months. Below we highlight several significant decisions and regulatory actions that charity trustees and managers should note:

Crackdown on cheque-cashing scheme

In May 2025, the Commission launched a statutory class inquiry after discovering that over 100 charities were involved in an unusual financial practice – issuing large cheques that were then cashed by a third-party company. 

An HMRC visit uncovered that 105 charities had cashed cheques totalling £22 million through one company between late 2021 and 2023. The Commission brought 10 charities into inquiry and issued legal orders temporarily banning them from issuing any cheques without approval. This action aims to stop potential mismanagement or abuse of charitable funds. Trustees should avoid any opaque financial arrangements and maintain clear records – large cash transactions will raise red flags.

Governance order at Islamic Centre of England 

Following serious governance concerns, the Commission issued a formal Order to the Islamic Centre of England Ltd in May 2025. This Order compels the trustees to implement reforms, including oversight of future speakers and online content published in the charity's name. 

The Commission had been inquiring into this charity since 2022 amid allegations of misconduct and mismanagement. After appointing an interim manager and finding previous failures by trustees, the regulator demanded improvements to ensure the charity's activities stay within its charitable remit and legal obligations.

High-profile dispute at Sentebale

Sentebale, a charity founded by the Duke of Sussex and Prince Seeiso, came under Commission scrutiny due to an internal governance dispute. In August 2025, the Commission concluded its compliance case and issued the trustees with a Regulatory Action Plan to address governance weaknesses. 

The Commission found that a lack of clear role descriptions and internal policies led to confusion, which exacerbated a conflict between senior figures. The dispute became public and resulted in several trustees and even the founding patrons (including Prince Harry) resigning. 

The Commission criticised all parties for allowing the dispute to escalate publicly and undermine the charity's reputation. This case shows that clear governance structures and internal dispute resolution are critical.

Continued scrutiny of defaulting charities

The Commission has continued enforcement through inquiries into charities that fail to file accounts or remain inactive. It has opened inquiries into trusts that repeatedly default on annual returns ("double defaulters") and those that exist on paper but spend little or none of their income on charitable work. 

One such inquiry (opened in July 2025) has already led to several defaulting charities being removed or directed to restructure. If your charity is struggling to operate effectively or meet reporting obligations, the Commission's Revitalising Trusts programme can help. Trustees should seek help rather than ignore filing deadlines. 

Unlike company law, charity law does not recognise 'dormant' charities – inactive charities must either operate or wind up.

Tribunal upholds refusal of "conversion therapy" group

The Charity Commission's approach was validated when the Charity Tribunal upheld its decision to reject an application for charitable status by the 'International Foundation for Therapeutic and Counselling Choice' (IFTCC). The tribunal agreed that the organisation – which promoted so-called "conversion therapy" – had "undoubtedly... a political purpose" incompatible with exclusively charitable purposes. 

This case confirms that groups with primary political campaigning aims (especially on controversial social issues) will not meet the charity test. An organisation's purposes must be solely charitable, not political.

The Commission's recent decisions highlight its focus on governance, financial integrity and proper charitable purposes. Trustees should ensure their charity's purposes remain charitable, maintain good financial controls, manage conflicts of interest and address any governance issues promptly. If contacted by the Commission (even for an informal compliance query), engage constructively and take remedial steps where needed.

5. Other updates for charity trustees

Beyond high-profile cases, there have been valuable updates in guidance that charity leaders should be aware of:

Trustee payments

In April 2025, the Charity Commission released redesigned guidance on paying trustees. The guidance is shorter, clearer and mobile-friendly, but its core message remains unchanged: trusteeship is fundamentally a voluntary role, and any payment to trustees should be exceptional. The updated guidance outlines scenarios where trustees can be paid and expands on the expenses that trustees may claim back from charities.

Finance toolkit for trustees

The Charity Commission has expanded its Trustee Finance Toolkit. A new Financial Health Check module has been added, complementing existing tools and checklists. 

This interactive toolkit poses questions trustees should ask about financial strategy, reserves, controls and cybersecurity. It empowers boards to spot warning signs early (such as operating deficits or cash flow issues) and strengthen internal financial governance. We encourage trustee boards to use this free resource.

Charity Sector Risk Assessment 2025

For the first time, the Commission has published an annual Charity Sector Risk Assessment (covering data up to 2023). The 2025 report highlights concerning trends: about 22.5% of charities reported operating at a deficit in the last year, indicating many organisations are struggling with rising costs and increased demand. 

The Commission also flagged risks such as misuse of charities for personal gain (fraudulent Gift Aid claims or unauthorised payments), safeguarding failures, cyber threats and geopolitical issues. Trustees should strengthen financial planning and review governance policies to address these risk areas.

"De-banking" protections for charities

Many charities have reported issues with banks suddenly freezing or closing accounts, sometimes due to misunderstandings around international transfers or risk profiling. 

In response, the UK Government announced new rules to guard against unjustified bank account closures. From April 2026, banks will be required to give at least 90 days' notice before closing an account and provide a clear explanation for the closure. This is a welcome development for charities, giving them more time to challenge decisions or make alternative arrangements.

Cybersecurity

The UK's National Cyber Security Centre has launched a free Cyber Action Toolkit for small charities, which we recommend exploring in light of rising cyber threats. Good data protection and cyber hygiene are increasingly part of good governance.

Conclusion and further support

The regulatory framework continues to develop. Our charity law team is here to help you navigate these changes – whether updating governance documents, training trustees or responding to Commission enquiries. Please get in touch if you would like to discuss any of these developments.