What the updated Charity Commission guidance on ex-gratia payments means for trustees
The Charity Commission (Commission) updated its guidance on how charities can make a moral, or ‘ex-gratia’ payment (Guidance) on 27 November 2025. This guidance brings into effect the changes introduced to the ex-gratia payment provisions by the Charities Act 2022 (Act).
This is the final stage of changes from the Act to come into effect. We have previously published summaries of the following:
- The first stage of changes that came into effect on 31 October 2022;
- The second stage of changes that came into effect on 14 June 2023; and
- The third stage of changes came into effect on 7 March 2024.
In this article, Samantha Pritchard, partner and Thalia Agoglossakis Foley, trainee in our sports, education and charities team, review the recently amended Guidance.
What is an ex-gratia or moral payment?
In charity law, an ex-gratia payment is a payment made where the charity's trustees (a) have no legal obligation to make the payment, (b) believe that they nonetheless have a moral obligation to make the payment, and (c) cannot justify the payment as being in the best interests of the charity.
This would also include the transfer of non-monetary assets by the charity, as well as the waiver of the charity's rights to money or other property to which it is entitled but has not yet received.
This most commonly arises when someone leaves a legacy in their will to a charity but later instructs their solicitor to prepare a new will and dies before the new will can be executed.
The two key changes
1. The Guidance reflects s. 16 of the Act and allows for trustees to delegate authority to decide whether the trustees could reasonably be regarded as being under a moral obligation to make a payment. The Guidance outlines how trustees can limit their delegated authority and what practical considerations they should take into account. Prior to the introduction of this provision, there were doubts about trustees' ability to delegate this decision, so the change will be welcomed by many charities.
2. The Guidance also reflects s. 15 of the Act and sets out the thresholds for the new small payments provision, under which ex-gratia payments can be made without the Commission’s authority. The thresholds depend on the gross income of the charity in the last financial year. Before this provision was introduced, all ex-gratia payments had to be authorised by the Commission. However, the Commission had stated it was unlikely to challenge cases where the amount of money was relatively small (say, £1,000 or less) and the charity trustees felt it would not be administratively sensible to apply for authority to make the payment.
Why were the changes made?
When releasing the Guidance, the Commission stated that the Guidance is designed to help charity trustees understand how to apply the law and when they need to obtain the Commission's permission.
When the changes were first introduced by the Act, the exclusion of national museums and galleries from the ex-gratia payments provisions stirred a debate. This is because the Act cannot be used for the return of objects and artefacts to their country of origin, as had been previously discussed. The Guidance does not make any mention of restitution, therefore reasserting that the Act cannot be used for this purpose.
How should trustees decide on ex-gratia payments?
Trustees should consult the Guidance when making a decision on ex-gratia payments to ensure they comply with the most recent changes.
The Guidance includes a helpful list of examples, detailing different situations where charities may be placed in a position to consider making an ex-gratia payment or waiving their right to receive a payment and drawing conclusions in each case.
If you need legal support in relation to the Guidance, or any other aspect of charity law, do not hesitate to contact Samantha Pritchard at [email protected] or 0191 211 7905.