Sale of goods by trustees to their charity and payment for work carried out

The Charities Act 2022 received Royal Assent on 24 February 2022 but its provisions will not be effective until implemented by means of regulations to be made by the Secretary of State. Once implemented the Act will enable a trustee to be paid for goods that they provide to their charity (even if it is not expressly permitted in the charity’s governing document), if doing so is in the charity’s best interests and the amount is reasonable, without needing Charity Commission approval, subject to appropriate safeguards. The Act also provides that that approval will also no longer be needed in the case of supply of services.

The Act aligns the rules on supply of goods by a trustee with the existing rules allowing trustees to be paid for services that they provide to their charity. These changes create consistency in the rules and enable charities to access goods which may be offered at more favourable terms by a trustee than elsewhere.

Trustees will, when the Act is implemented, therefore be able to supply either goods or services or a combination of goods and services and be paid for that supply. The changes made by the Act do not also extend to allowing trustees to be paid for services to a charity comprising acting as a trustee of the charity or to be paid as an employee of the charity: such payment is not permitted.

The Act’s provisions also empower the Charity Commission to order a charity to make payment to trustees for exceptional skill and effort with which they have carried out work for their charity in circumstances where it would be unjust not to do so. The Commission must bear in mind several factors when making its decision as to whether to authorise payment and the amount of the payment to be made. These include whether if the trustee had not carried out the work, the charity would have paid someone else to carry it out, the level of skill with which the work was carried out, any express provision in the charity’s constitution prohibiting a trustee from receiving the remuneration, and whether making the payment would encourage breaches of trust or duty by anyone else acting as a trustee of any charity.

Once the implementation dates for the relevant provisions of the Act are known, and if any supporting legislation is subsequently passed which impacts on those provisions, this page will be updated if and as necessary to reflect that impact.