The amendments made to the Charities Act 2011 by sections 15 and 16 of the Charities Act 2022 finally come into effect on 27 November 2025, allowing charities to make certain ex gratia/moral payments without the Charity Commission’s consent.

What is an ex gratia/moral payment?

Ex gratia, or moral, payments are those where the trustees of the charity feel morally obliged to make a payment, do not have a legal obligation to make the payment and cannot justify the payment being in the best interests of the charity. 

An example we often see is where a donation has been made to the charity, the donor asks for it to be returned and because of the circumstances around that request, the trustees feel they cannot morally justify keeping hold of the payment. This might be because of the principles the charity subscribes to (as may be the case for faith-based charities) or the circumstances of the donation. 

What was the position?

Prior to 27 November 2025, the general position was that ex gratia/moral payments required authority from the Charity Commission. 

Whilst operational guidance published by the Charity Commission suggested payments of £1,000 or less (made from the feeling of moral obligation by the trustees) were unlikely to be challenged by the Commission, from the perspective of good governance, Commission authority should always have been sought. 

Further decisions whether to make an ex gratia or moral payment had to be made by the trustees and could not be delegated. 

So what is new and how does this affect me? 

Certain payments can be made without Charity Commission consent

What has not changed is that in order to make any ex gratia/moral payment:

• the trustees must have no power to take the action apart from under the Charities Act 2011; and
• that in all the circumstances the trustees could reasonably be regarded as being under a moral obligation to take the action (i.e. the repayment).

The changes brought in by the Charities Act 2022 set out the level of ex gratia/moral payments which are permitted and no longer require the prior consent of the Commission. These are based on the gross income of the charity making the payment from its last financial year. The limits are: 

• gross income of £25,000 or less - maximum payment of £1,000 permitted;
• gross income over £25,000 but no more than £250,000 - maximum payment of £2,500 permitted;
• gross income over £250,000 but no more than £1 million - maximum payment of £10,000 permitted; and
• gross income over £1 million - maximum payment of £20,000 permitted.

For example, the trustees of a charity with a gross income of £26,000 would be permitted to make a maximum ex gratia/moral payment of up to £2,500. 

The limits apply to any single payment. So, if there are multiple ex gratia/moral payments the trustees are seeking to make, the relevant limit for that charity applies to each of the payments respectively. 

However, if you are looking to make a payment that exceeds the cap, then Charity Commission consent would be required.

Trustees can delegate decisions

A further change is that decisions about ex gratia/moral payments can be delegated by the trustees. For example, this could be delegation to a committee within the charity or to particular members of staff. There is still the need for there to be a moral obligation to make the payment, but this will be an objective test.

The decision to delegate rests with the trustees, and oversight from the trustees where they do delegate is required, as the trustees retain responsibility for the decision. Trustees should therefore consider the policies and procedures they need to have in place to ensure there is a strong decision-making framework.

Commission decisions can be challenged

If a charity applies to the Commission for permission to make an ex gratia/moral payment that exceeds the cap, and the Commission refuses to grant permission, this can now be contested at the First-Tier Tribunal. As is the case for any potential appeal, trustees should consider whether pursuing such a course of action is in the best interests of the charity and cost-effective in the circumstances. 

It is important to note that if an application for Commission consent was made before 27 November 2025, the decision of the Commission cannot be contested as it pre-dates these changes. 

Are any charities excluded?

The decision to bring in the changes to ex gratia/moral payments was delayed due to concerns about the scope for the return of artefacts by museums and galleries, particularly those established by statute. Accordingly, these changes exclude certain assets held by those museums and galleries and the full list of those affected can be found here.