cCharity Commission’s Annual Return 2023: charities need to know

The Charity Commission is the body responsible for registering and regulating all charities and not-for-profit organisations in England and Wales. Part of its role is helping us, the public, feel we can support charities with confidence and ensure that charities can fundraise legitimately and effectively.

As part of the regulatory process, registered charities must send an Annual Return to the Charity Commission or report their income and spending every year. This will vary depending on the individual charities’ income.

Charities earning under £10,000 a year only need to report their income and spending. If their income sits between £10,000 and £25,000, they must answer questions about the charity by providing an Annual Return.

If the charity earns over £25,000, it must complete the Annual Return, have the accounts checked and provide: a copy of the trustees’ annual report, accounts, and an independent examiner’s report. All charitable incorporated organisations (CIOs) must submit an Annual Return and accounts regardless of their income.

Last December, proposed changes were set out for the 2023 Annual Returns process. As it had stayed the same for the last couple of years, all charities with financial years ending on or after the 1^st of January 2023 need to take note.

The Charity Commission Annual Return 2023

The Charity Commission’s 2023 update to the Annual Return has been through a consultation process to get meaningful and constructive feedback. This has been taken onboard with the changes to the final return from the initial draft.

There has been a reduction in the maximum number of questions that charities can be asked. It’s now 49, which is three less than was proposed in the initial consultation. Secondly, the introduction of income thresholds for five of the new questions will help to further reduce the burden for small charities.

Nineteen of the questions have been reworded to improve clarity and reduce the resources and time that need to be spent by the charities. Finally, there have been improvements in the glossary and guidance that the Charity Commission provides. These can help guide charities through all the questions and answer any queries.

What new information will I need?

The latest Annual Return requires extra information from most charitable organisations. Firstly, you will be required to either confirm or update the public address for the charity.

From there, charities will need to supply confirmation of the policies and procedures they have in place at the end of their financial period. At the end of this period, they will need to declare how many people were permanently employed by the charity, how many were on fixed-term contracts and any self-employed people who were working for the charity.

Charities will also need to confirm the value of any grants paid to individuals, other charities and other organisations which are not charities and whether any recipients were related parties.

Other than trustees, the charity will also need to declare whether they have members who are entitled to vote under the charity’s governing document.

Income-based questions

As well as the additional more general questions, there are also questions based on income levels. This is to better help smaller charities. For charities with an income of £500,000 or less during their financial year, they will be required to provide the total value of their income. This will be from donations and legacies, charitable activities, and other trading activities and investments. For most charities this will follow the treatment of their income within their accounts.

For charities with an income in excess of £100,000, they will be required to provide the value of the charity’s single highest value donation. These will be from either a corporate donor, individual or a related party. As a result of the consultation this requirement was removed for smaller charities to reduce the administrative burden on these.

A helpful guide

A new guide was released in January to help support charities with these changes. The guide gives details about what they’re going to be asking, why and how they’re going to use the data.

In 2024, a further six questions are going to be removed from the Annual Return. This should reduce the burden on smaller charities and not-for-profit organisations even further.

Overall, it is the Charity Commission’s goal to use the data received from charities more effectively. They have said it will help them to better identify risks and trends within the charity sector to help the public make better informed choices.

The Annual Return will be available to file online later in the year using a new digital service which is currently being rolled out by the Charity Commission. The guide and a glossary will be available as part of this digital service to ensure the Annual Return process is simple and efficient.

The Charity Commission is currently asking trustees to ensure that their details are up to date to enable them to access their new personal Charity Commission account when these are launched.

We’re here

At Westcotts, we understand the challenges that come with running a charity or not-for-profit organisation. We’re able to help you navigate the Charity Commission’s updated Annual Return process for the new financial year, allowing you to meet the increasing demands of funders, the public and regulators.

For more information and to speak to a member of our charities team, visit our Contact Us page, fill in our online form or call us on 01392 288555.