Ex gratia payments: new freedoms – and the national collections exception

Since 27 November 2025, charities in England and Wales have had greater flexibility when dealing with ex gratia (or “moral”) payments. These reforms represent the final tranche of implementation of the Charities Act 2022, bringing into force the long‑anticipated changes to how charities may authorise and manage moral payments 

In short, trustees are now able to authorise smaller ex gratia payments without applying to the Charity Commission, provided strict conditions are met. The Commission updated its guidance (CC7) on the same day to reflect the new statutory framework. 

The commencement of these provisions had been significantly delayed following concerns about their potential impact on national museums and galleries. In particular, the Government was concerned that the new ex gratia powers could, unintentionally, be used to circumvent existing statutory restrictions that prevent certain institutions from disposing of collection items, including by way of moral restitution. As a result, the provisions were not brought into force until a tailored commencement regime could be put in place that preserved those protections. 

The reforms are therefore designed to strike a balance: reducing delay and administrative burden for most charities in straightforward, low‑value cases where a charity is legally entitled to retain funds, but trustees consider it would be morally wrong to do so, while maintaining specific statutory safeguards for designated national collections. 

What is an ex gratia payment? 

A charity can only use its funds and assets to further its charitable purposes. Occasionally, however, trustees may feel there is a compelling moral reason to pay money out of the charity’s funds, or transfer property, or waive a right to money or property the charity is entitled to receive (but has not yet received), even though there is no legal obligation to do so and the trustees cannot justify the decision as being in the charity’s best interests. This is what the Commission refers to as a “moral” (ex gratia) payment. 

Ex gratia payments arise most commonly in the legacy context. A typical scenario is where there is clear evidence a testator intended to change their will but died before the change was validly completed. Trustees may conclude that keeping the full gift would be morally wrong, even though the charity is legally entitled to it. 

Although legacy cases are the most familiar examples, ex gratia payments are not confined to Wills and estates. They can arise in a range of other situations, for example: 

• A donor makes a significant donation believing they can afford it but later experiences an unexpected and serious change in circumstances (such as acute illness or financial hardship). The trustees may conclude that, despite having no legal obligation to do so, it would be morally wrong to retain all or part of the donation. 
   
• A charity receives funds as the result of an administrative or factual error made by a third party, where the charity is legally entitled to keep the money, but the circumstances mean it would be unjust to do so. 
   
• A charity holds property or funds that were transferred many years ago in circumstances that would now be regarded as ethically problematic, even if legally valid at the time, and where restitution is sought on moral grounds. 
   
• A charity has benefited financially from the actions of a volunteer or supporter who has suffered loss or detriment whilst supporting the charity, even though there is no legal liability on the charity to compensate them. 

These examples illustrate why ex gratia decisions often sit uncomfortably within a strict legal framework, and why careful evidence‑based assessment of moral obligation is required in each case. 

The key question is not whether making the payment feels kind, but whether the trustees could reasonably be regarded as being under a moral obligation in the circumstances. 

The Commission’s guidance uses the concept of the charity being “unjustly enriched” as the underlying rationale for why these cases arise. This is a high bar. Trustees should expect to need clear, objective evidence (for example, a draft Will, solicitor’s letter, or other independent material) rather than relying only on assertions from disappointed beneficiaries. 

What changed in November 2025? 

There are two practical changes that matter most for charities.

1. A new power to make small ex gratia payments without Commission authority 

A new statutory power (reflected in section 331A of the Charities Act 2011) allows trustees, in qualifying cases, to make ex gratia payments without applying to the Commission if the value is within the relevant threshold (based on the charity’s gross income in its last financial year). 

In broad terms, you may be able to proceed without Commission authority where you are satisfied the trustees could reasonably be regarded as under a moral obligation, there is no other legal power to make the payment/transfer/waiver, the charity’s governing document does not prohibit or restrict using the ex gratia power, and the payment is within the applicable financial threshold. 

The thresholds are: 

It is important to note that the limit is the total value of the proposed moral payment in each case (it is not a “per instalment” test), so you cannot split a larger payment into smaller amounts to avoid applying to the Commission. 

If a proposed payment is above the relevant threshold, Commission authority is required before anything is paid, transferred or waived. You will need Commission authority where, for example, the payment exceeds the threshold, your governing document contains a specific restriction that prevents (or limits) that type of payment, or the case falls within the special restrictions for certain national collections (explained below). 

2. Delegation is now expressly recognised (with safeguards) 

Before the new provisions came into force, although charities could seek Charity Commission (or court) authority to make an ex gratia payment, the decision as to whether a moral obligation existed was widely understood to be one that had to be taken personally by the charity trustees. In practice, this meant that even routine or low-value cases had to be escalated to the full trustee board, with trustees required to turn their minds to the moral test in each individual case. 

For charities dealing frequently with borderline or repetitive scenarios (particularly larger charities with significant operational activity or legacy income), this often resulted in delay and disproportionate use of trustee time, even where the underlying issue was relatively straightforward. 

The Charity Commission’s updated guidance now makes clear that trustees may delegate decision-making authority on ex gratia matters to appropriate people within the organisation (for example legacy officers, the chief executive, finance director or a sub-committee of the board), provided there is a clear framework for delegation, reporting and oversight. Trustees remain ultimately responsible for the decisions made. 

This represents a significant and practical shift. The test is now an objective one – namely whether trustees could reasonably be regarded as being under a moral obligation – which means it no longer depends on the personal views or subjective feelings of individual trustees. 

For many charities, this change is particularly helpful. It allows charities to build ex gratia decision-making into their existing governance structures, to deal with recurring or low-risk scenarios efficiently, and to avoid unnecessary escalation to the trustee board in every case. This can be especially valuable where requests are time-sensitive, emotionally charged, or arise at moments when delays risk causing avoidable distress or reputational difficulty. 

The national collections exception: what is (and isn’t) excluded 

The delayed implementation of these reforms was driven largely by concern about how they might interact with statutory restrictions that prevent certain national museums and galleries from disposing of collection items. 

The commencement regulations therefore take a targeted approach: they exclude specified “property” (collection objects) of 16 named statutory charities from the commencement of the new ex gratia provisions, preserving the existing statutory prohibitions on removing objects from those collections. 

The 16 institutions are listed in CC7 and include, among others, The British Museum, The Tate Gallery, The Natural History Museum and Royal Botanic Gardens, Kew. 

It is important not to overstate the effect of this carve‑out. The restriction is about certain collection objects held by those institutions; it does not mean those charities are barred from the ex gratia regime entirely. The Charity Commission has indicated that those institutions can still make small moral payments (within the thresholds) from other assets and can still apply for Commission authority where required. 

DCMS has said it will review the decision to exclude the national collections within the post‑implementation review of the Charities Act 2022, expected by February 2027. 

Practical steps for trustees (a short checklist) 

Whether you are making a small payment without Commission authority or applying to the Commission, good governance and record‑keeping are essential. 

1. Confirm this is truly “ex gratia” 

Make sure the payment or waiver is not something you can justify as being in the charity’s best interests (which is a different category with different considerations). 

2. Check your powers 

Review your governing document for any restriction on making moral payments and confirm there is no other legal power available. 

3. Assess the evidence 

In legacy cases, look for independent evidence of the deceased’s settled intentions and why the will could not be validly changed. 

4. Apply the thresholds correctly 

Use the charity’s gross income for the last financial year and remember you cannot split a payment to stay within the limits. 

5. Document the decision 

Record the reasoning, any evidence relied upon in reaching your decision, any delegation decision/terms of reference, and the final decision (minutes or written resolution). 

6. If Commission authority is needed, apply before paying/waiving rights 

The Commission’s guidance sets out the information it expects in an application (including the justification and supporting evidence). 

The Birketts view 

For most charities, these reforms are a sensible piece of regulatory “tidying up”: they recognise that small ex gratia decisions (particularly in legacy administration) should not routinely require an external authorisation process, provided trustees can evidence a genuine moral obligation and stay within the statutory limits. 

In practice, the ability to delegate decision‑making, combined with the new small payments power, should have a significant day‑to‑day impact for charities, by reducing delays and allowing trustees to focus their time on higher risk or genuinely contentious cases. 

The more difficult policy questions sit with the national collections exception. The law now draws a line between faster decision‑making for most charities and continued statutory protection for specific national collections, with DCMS committed to reviewing that position by February 2027. 

If you are considering an ex gratia payment (or responding to a request from executors or family members), we can help you assess whether the case is genuinely ex gratia, whether the small payment power can be used, and what evidence and governance steps will best protect your trustees and the charity.