Intro

From 27 November 2025, significant reforms to the rules on ex gratia payments (now referred to as “moral payments” under Charity Commission guidance) take effect for charities in England and Wales under Sections 15 and 16 of the Charities Act 2022.

The Charity Commission has updated CC7 to reflect the new statutory power enabling many charities to make small moral (ex gratia) payments without prior Commission authority, provided set conditions are met.

Q1: What changed on 27 November 2025?

• From that date, many charities are now able to make small ex gratia payments without needing prior Charity Commission consent.
• There is a statutory power under the Charities Act 2022 for trustees to approve these payments themselves, subject to conditions.
• Trustees can delegate the decision-making (for example, to a staff member or committee), though they remain responsible overall.

Q2: What exactly is an “ex gratia” or “moral” payment”?
It’s a payment (or waiver of a right) made by a charity where the charity has no legal power obligation to make, but the trustees could reasonably be regarded as being under a moral obligation to make.

Examples: compensating someone for a loss where the charity is not legally liable, returning property where the legal owner cannot be established but fairness suggests returning it, making small goodwill or thank you payments (e.g., leaving gifts to long‑standing volunteers or trustees), waiving a debt owed to the charity.

Q3: How much can a charity pay without Commission consent?
It depends on the charity’s gross income in its most recent full financial year:

Q3: How much can a charity pay without Commission consent?
It depends on the charity’s gross income in its most recent full financial year:

Charity’s gross income in its last financial year	Maximum individual payment allowed without Commission authority
£ 25,000 or less	£ 1,000
Over £ 25,000 up to £ 250,000	£ 2,500
Over £ 250,000 up to £ 1 million	£ 10,000
Over £ 1 million	£ 20,000

These limits apply per payment, not per year, so a charity could make multiple payments, each up to the cap, provided each meets the conditions.

Q4: What conditions must be met for trustees to rely on the new power?
Three key conditions must all be met:

• The payment (or value of property involved) must not exceed the relevant threshold.
• Trustees must have no other legal power under the charity’s governing document or law to take that action (apart from this new power).
• In the circumstances, the trustees must reasonably believe there is a moral obligation to make the payment (objective test).

Q5: What does “moral obligation” mean here?
The test is objective: trustees should ask themselves: “Could we reasonably be regarded as having a moral obligation?”

It’s not only about how the trustees personally feel, but also whether, in context, a reasonable person could view a moral obligation as existing.

Good practice: document why you believe there is a moral obligation, backing it up with facts and reasoning.

Q5A: How does the Charity Commission’s CC7 guidance affect what counts as a ‘moral’ (ex gratia) payment?
A payment can only be treated as an ex-gratia (moral) payment if the trustees believe there is a genuine moral obligation to make it. That means trustees consider the payment is the “right thing to do” in the circumstances, even though it does not advance the charity’s own interests.

If trustees instead think the payment is mainly in the charity’s best interests, CC7 says this is not an ex-gratia payment. These are described in the guidance as “other types of payments.”

“Other” payments cannot use the ex-gratia thresholds. To make these, trustees must rely on a suitable power in the governing document (such as an incidental power) or otherwise seek Charity Commission authority.

In practice, trustees should be clear about why they are proposing a payment:

• If it is genuinely driven by moral grounds, it may fall within the ex-gratia regime.
• If the reason is mainly about benefiting the charity, it will fall outside the ex-gratia rules and needs another legal basis.

Trustees should document their reasoning so that it is clear which category applies and why.

Q6: Can trustees delegate the decision to make an ex-gratia payment?
Yes. Under the new power, trustees can delegate the decision-making (e.g., to a sub-committee or staff) where the governing document permits. But:

• Trustees remain ultimately responsible for oversight.

Delegation policies should state who can decide, what limits apply, and how records of reasoning are kept.

Q7: Do governing documents matter?
Yes, a governing document may restrict or prohibit moral/ex gratia payments entirely. A governing document may require that decisions must not be delegated and must remain with the board. The new statutory power does not override these restrictions. Charities should therefore check their governing document before using the new power.

Q8: Are there any exclusions or charities that cannot use the new rule?
Yes. This includes:

• Certain statutory charities, especially those holding protected cultural or heritage property (e.g., national museums/galleries), cannot use the simplified power in relation to that property.
• Payments involving overseas transfers (e.g., restitution abroad) may still require Commission authority even within thresholds.

Such charities may still use the power for other assets or apply for Commission consent for restricted assets.

Q9: What should trustees do to prepare?
Trustees should:

• Review the charity’s governing document for any restrictions.
• Create or update a policy for making ex gratia payments (who can decide, what records must be kept).
• Train any staff or sub-committee who may be delegated decisions.
• Ensure their minutes and records clearly state: the amount, the payment-recipient, why a moral obligation exists, that no other power applied, that the threshold was met, and that the payment is in the charity’s best interests.
• Check if the charity holds or disposes of cultural assets, or makes payments overseas, if so, extra caution applies.

Trustees should consider whether any payment aligns with good governance

Q10: What if a payment the charity wants to make exceeds the threshold?
If a proposed ex gratia payment is above the relevant threshold:

• The charity cannot use the new simplified power.
• The trustees must apply to the Charity Commission (or possibly the Attorney General or court) for formal permission / authorisation under the older regime.

Trustees should also check whether the payment could be made under a different power (e.g., payment under staff remuneration policy) rather than as ex gratia.

Q11: Do the new rules affect how ex gratia payments are reported?
Yes, because good governance still applies. Trustees must document the decision fully: how they reached it, the moral-obligation reasoning, confirmation of no other power, that the amount was within threshold, how delegation (if any) was used.

In the charity’s accounts, ex gratia payments should be disclosed properly (for example as non-charitable expenditure or waiver of rights) and the note should explain the nature, reason and amount as per the applicable Statement of Recommended Practice (SORP).

Q12: Will the threshold amounts stay the same?
Possibly not: the government has indicated the thresholds may be reviewed, for example to align with inflation. The Secretary of State has power to amend them by regulation. Charities should check the most up-to-date guidance.

Q13: What happens if the trustees get it wrong?
If trustees fail to follow the rules:

• They may need to apply for retrospective Commission approval (if possible).
• The Charity Commission may investigate, especially if the payment is large or contentious.

Trustees’ duty to act in the charity’s best interest means they must take care; poor governance, poor documentation or failure to justify the moral obligation could be challenged.
Sources

Q14: Where can I find the formal legal source and further guidance?
CC7 (2025 update): “How charities can make a moral, or ‘ex-gratia’, payment” – GOV.UK.
Legislation: Charities Act 2022, Sections 15–16 (ex gratia payments) and commencement regulations.
Implementation Plan: GOV.UK (confirms the 27 November 2025 commencement date).
Legal/commentary sources: ICAEW, Browne Jacobson, Foot Anstey.

Sources

• Charity Commission, CC7: How charities can make a moral, or “ex‑gratia”, payment (updated 27 November 2025):
• “Charities Act 2022: implementation plan” (GOV.UK) – including commencement date and exclusions.
•  Legislation: “Ex gratia payments etc — Charities Act 2022” (legislation.gov.uk).
•  “Ex gratia payments: understanding your responsibilities” (ICAEW article) – explanation of what ex gratia payments are and changes expected.
• Browne Jacobson, “New powers for charity trustees: Small ex gratia payments” – thresholds, conditions, exclusions.
• Foot Anstey, “New power to make ex-gratia payments gets the green light” – confirms thresholds and per-payment basis.