The Government has announced that the new subscription contracts regime under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) will come into force in January 2027, earlier than the “Spring 2027” timeframe previously expected. The reforms are intended to tackle so-called “subscription traps” by making it easier for consumers to understand, manage and cancel recurring contracts. The basic rules are outlined in this blog.
For charities, the key question is whether membership and subscription-based arrangements fall within the new regime.
There is encouraging news for parts of the sector. Following consultation, the Government committed to legislate to exclude certain charitable memberships from the subscription contracts regime. Broadly, the exclusion is intended to cover contracts between a charity and a consumer that provide access to places, collections, performances or other activities connected with the charity’s purpose, such as museums, galleries, heritage properties, landscapes and performing arts organisations. We covered this in our blog in April. As yet no subordinate legislation to bring this exclusion into effect has been published.
The Government has also provided reassurance on an issue that has concerned many charities: Gift Aid. The Government reiterated HMRC’s position that compliance with consumer protection rules does not, of itself, mean that a payment is made subject to a condition of repayment. This is important because Gift Aid is generally unavailable where a payment is subject to repayment conditions. HMRC’s guidance still states that this is an ‘interim position’ so it will be interesting to see if that is updated.
Next steps for charities
Review all membership, subscription and recurring payment arrangements.
Identify which products or services may fall within the new subscription regime.
Monitor the secondary legislation establishing the charity carve-out (and keep an eye on our blog because we are watching out too).
Where applicable, consider any operational changes required to provide pre-contract information, renewal reminders, straightforward ways of cancelling a subscription, and end of contract notices where the regime applies.
Keep Gift Aid treatment under review and ensure relevant teams understand HMRC's current guidance.
A final word
Although the Government's confirmation of a charity carve-out is welcome, the detail will be critical. Not all charity subscription arrangements are likely to fall within the exclusion, and organisations should avoid assuming that existing membership or supporter schemes will automatically be exempt. Further government guidance relating to the subscription regime may also help shed further light on this, but no publication date has yet been forthcoming. In the meantime, charities with significant subscription income, membership programmes or recurring supporter arrangements should consider seeking professional advice if they are uncertain about how the new regime may apply to their activities, especially in light of the enforcement powers available to the Competition and Markets Authority in the event of a breach of the DMCCA and the potential for fines of up to 10% of an organisation’s annual global turnover. The implementation date in January 2027 leaves a relatively short window to assess risks, review documentation and prepare for compliance.
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