Annual Return 2018: the advent of the new, tailored approach

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Following publication in January of the Charity Commission’s response to the consultation on the information to be requested in the Annual Return 2018, and the coming into force of the relevant regulations on 1 January 2018, this summer will see the introduction of a new, “tailored” Annual Return.

Following publication in January of the Charity Commission’s response to the consultation on the information to be requested in the Annual Return 2018, and the coming into force of the relevant regulations on 1 January 2018, this summer will see the introduction of a new, “tailored” Annual Return.

The 2018 online return will involve certain questions being asked of every charity, and then some charities being given further questions to complete, depending on their previous answers.

Along with this new approach come new questions requiring new information from charities completing the return, and charities required to complete the annual return should consider what additional information they may need to provide both this year, and next.

What additional information will charities need to provide to the Commission, and when?

The Charity Commission’s response to the consultation demonstrated it had taken into account the responses received to its consultation on new questions to be included in the 2018 Annual Return, and confirmed that it would not include questions on: 

  • Whether a charity has claimed rate relief for the premises they use
  • The amount of Gift Aid the charity has claimed

Changes to be expected in the Annual Return 2018, however, did include:

  • An extension to the question already asked about raising funds from the public, to obtain information about any arrangements with commercial participators or professional fundraisers, and the existence of signed contracts with such organisations.
  • A new question set about income received from local or national government, relating to number of contracts/grants and the value of such contracts/grants.
  • A new question set about:
    • the payment of trustees for their work as trustees or for professional advice provided to the charity,
    • whether any trustee had received any other benefit such as renting property from the charity at below market value, and
    • whether any employees of the charity during the financial period were formerly trustees of the charity.
  • A new question as to whether any of the charity’s trustees are also directors of any of its trading subsidiaries.
  • A new question regarding safeguarding, as to whether any of the charity’s trustees, staff or volunteers work directly with vulnerable beneficiaries and whether DBS checks have been carried out as appropriate.

The Commission also, in response to the consultation, amended certain of the questions it proposed to ask in relation to income received from overseas, and responded to concerns regarding the publication of details of the pay and benefits received by the highest paid member of staff.

Now, the Commission has highlighted the additional information that will be required for the Annual Return 2018 on the subjects of overseas spending, income received from overseas, and staff salaries and benefits, so that charities can prepare themselves.

Overseas spending

The Commission originally planned to include more questions in the new Annual Return about how funds are transferred overseas, and their expenditure monitored.

However, because it is recognised that some charities will need to change their record keeping in this area to provide the information requested, the questions relating to the way in which funds are transferred outside the regulated banking sector and the subsequent monitoring of their expenditure will be voluntary for the Annual Return 2018, and only mandatory from the Annual Return 2019 onwards.

Income from non-UK sources

The new Annual Return requests more information about sources of a charity’s funds that come from overseas.

The Commission has confirmed that the choices available to charities in this section will be:

  • Overseas governments
  • Overseas charities, NGOs and non-profit organisations (NPOs)
  • Other overseas institutions (for example, private companies)
  • Individual donors resident overseas
  • Unknown

However, again because it is recognised that some charities will have to change their record keeping in this area to be able to provide this information, the provision of information on income received from overseas from individual donors and private institutions (that are not charities, NPOs or NGOs) will be voluntary for the 2018 Annual Return, but then obligatory from the Annual Return 2019 onwards.

The Commission, in its response to the consultation last year, confirmed it would put thresholds in place to reduce the regulatory burden for charities which would apply to funds received from individual donors or private institutions (so, not charities, NPOs, NGOs or governmental organisations), and the new regulations provide that:

  • Charities with an income of £25,000 or less are only asked to report individual payments from individual donors or private institutions outside the UK (other than charities, NPOs and NGOs) if those payments comprise 80 per cent or more of the charity’s gross income for the financial year.
  • Charities with an income of £25,000 or more will only be asked to give the total value of all of the individual payments from individual donors or private institutions outside the UK (other than charities, NPOs and NGOs), which are more than £25,000.

Salaries and benefits

There will be questions relating to executive pay included in the Annual Return 2018, with charities asked to provide information about the total remuneration – including salary, bonuses, pension contributions, private health care and other benefits in kind – received by staff members.

Information on how many individuals receive total packages worth upwards of £60,000 will be made public in bands (in bands of £10,000 up to £150,000, then in bands of £50,000).

The Commission will also require information from charities about their highest paid employee, but will not publish this, instead holding the information for regulatory purposes.

Who needs to complete the Annual Return, and when will it be available to complete?

The Annual Return 2018 will have to be completed by any registered charity with an annual income of more than £10,000, and a financial year ending from 1 January 2018. The Annual Return must be submitted to the Commission within ten months of the end of a charity's financial year.

Those wishing to be notified when the Annual Return 2018 becomes available should sign up to receive email notifications from the Commission. The Commission has confirmed it will be available by the end of August.

What to do now?

Until the Annual Return becomes available, charities should take the opportunity to make sure that they have the information that they will be required to provide in the Annual Return 2018, and consider what systems they may need to put in place to be in a position easily to provide the additional information that will only be required from next year’s Annual Return.
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