Charity compliance rules changing: Trustees and staff members of charities or Community Amateur Sports Clubs (CASC) need to be aware of changes coming in April 2026.
HMRC is tightening the rules around charitable tax reliefs, meaning that all charities will feel the impact of a stricter compliance environment.
What’s changing from April 2026?
The government is rolling out several charity compliance measures designed to close loopholes and crack down on abusive arrangements. The key changes include:
1. Stricter tests for tainted donations
The “tainted donation” rules are designed to prevent donors from obtaining financial benefits in return for their donations; either for themselves or for someone else involved in the arrangement.
From April, the test for what counts as a tainted donation will be stricter, making it harder for donors to claim tax relief if there’s any hint that they (or someone connected to them) are benefiting financially from the charity or CASC.
In practice, this means charities need to be even more careful about:
- Transactions with donors or their connected parties
- Benefits provided in return for donations
- Ensuring Gift Aid claims are fully compliant
2. Approved charitable investments
All investments made by charities must now demonstrably be for the benefit of the charity itself, not structured to avoid tax.
This change ensures that investment strategies are genuinely charitable in nature and can’t be used as vehicles for tax planning unrelated to the charity’s mission.
3. Attributable Income and Legacies
Legacies are now being brought within the scope of “attributable income.”
This means that any income classified as attributable, including legacies, must be spent on the charity’s charitable purposes. If it’s not, it becomes subject to a tax charge.
For charities that receive substantial legacies, this change demands careful planning to ensure funds are deployed in line with charitable objectives within the required timeframes.
Why the changes to charity compliance rules?
These changes are part of the government’s broader effort to:
- Close the tax gap
- Strengthen compliance powers of HMRC
- Challenge abusive arrangements that exploit charitable tax reliefs
The government states: “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 tackle this, HMRC is being handed enhanced powers to compel compliance, including the ability to sanction trustees and charity managers directly.
Amended guidance on the Fit and Proper Persons test is also expected imminently, raising the bar for who can serve in senior charity roles.
What this means for trustees and staff:
The new rules serve as a clear reminder that charity compliance isn’t optional, it’s essential.
If you’re feeling uncertain about how these changes affect your charity or CASC, or you simply want to ensure your compliance processes are up to date, we’re here to help.
We can assist with:
- Reviewing your Gift Aid processes and donation records
- Ensuring your investments and income strategies comply with the new rules
- Setting up robust record-keeping systems
- Navigating legacy planning under the attributable income rules
- General charity compliance health checks to give you peace of mind
If you have questions or need support in any of these areas, please don’t hesitate to get in touch on 01905 777600, or email hello@ormerodrutter.co.uk. The team are here to help you stay compliant so you can focus on what really matters.
