New ex gratia rules for charities from 27 Nov 2025
From 27 November 2025, charities in England and Wales gain a clearer route for making small ex gratia payments. These changes switch on sections 15 and 16 of the Charities Act 2022 via new commencement regulations signed on 14 November 2025, and they sit alongside tidy‑up amendments in section 40 and Schedule 2 of the 2022 Act. If you work with trustees, manage a student society, or teach charity law, this is a practical update you can put to work straight away.
An ex gratia payment is a voluntary payment or transfer where the charity has no strict legal power to pay, but there is a strong moral reason to do so. Think of honouring a donor’s clear intention where a legacy has technically failed, or making a modest payment to a relative of a deceased volunteer after an error caused distress. The law has long allowed these in principle; the question has been who can authorise them and when.
The new power allows trustees to make “small” ex gratia payments without applying to the Charity Commission, the court or the Attorney General, provided the legal test is met. “Small” is pegged to your charity’s gross income last year: up to £1,000 if income was £25,000 or less; up to £2,500 if income was over £25,000 but not over £250,000; up to £10,000 if income was over £250,000 but not over £1 million; and up to £20,000 if income was over £1 million. These figures are written into section 331A of the Charities Act 2011 (inserted by section 15 of the 2022 Act) and can be changed later by ministers under section 331B.
A key shift is the test you apply. The 2022 Act confirms an objective test: could the trustees reasonably be regarded as being under a moral obligation to act? It’s not about personal feelings. Because the test is objective, trustees may delegate the decision to staff or a committee. That said, trustees remain responsible for the decision and the reasoning behind it, so good records matter: who decided, the circumstances, the amount, and why the moral obligation standard was met.
Where a proposed payment is above your threshold, nothing changes: you still need authorisation. Section 16 of the 2022 Act also places the existing powers of the court, the Attorney General and the Charity Commission to authorise ex gratia payments onto a clear statutory footing. In practice, that should make the process plainer to follow and easier to explain to donors, beneficiaries and auditors.
There is a saving rule for in‑flight cases. If trustees applied to the Charity Commission for authorisation under section 106 of the Charities Act 2011 before 27 November 2025, that application carries on under the old arrangements. You don’t need to restart your paperwork; the Commission will finish the job on the same legal basis you began with.
One important limit sits alongside these freedoms. Some museums and galleries have collection objects protected by statute. The Schedule to the new regulations marks these as “relevant charities” and labels the protected items as “excluded property”. For those collections, the small ex gratia power does not apply to that listed property. This preserves long‑standing disposal restrictions for national collections and avoids using ex gratia rules to remove items where Parliament has set special safeguards.
What this means for museum teams and educators is straightforward: where collection items are protected by law, claims to transfer or return them still follow the established statutory routes, not the new small‑payment shortcut. This respects both donor intent and collection integrity while allowing other charities to resolve everyday moral claims proportionately.
For trustees and charity leaders, a short action list helps. Review your governing document to see if you want to restrict or exclude use of the small‑payment power. Update your scheme of delegation so it’s clear who can make decisions within your threshold and how they report to the board. Train budget holders on the objective test, conflicts of interest and record‑keeping, and note in your accounts where ex gratia payments were made and why. Avoid splitting payments to duck the limits; the power isn’t designed for repeat or piecemeal awards.
For classrooms, this is a neat case study in moral judgment within public‑interest organisations. You can contrast legal duty with moral duty, explore proportionality through the income‑linked thresholds, and examine why Parliament ring‑fences certain museum collections. By 27 November 2025, students should be able to explain what an ex gratia payment is, when it can be delegated, and why some collections are out of scope. That’s real‑world civic literacy.