Regulatory and legislative changes taking effect in 2026 will impact governance, fundraising, workforce management and financial oversight across the VCFSE sector.
Increased Charity Commission capacity
Additional investment in the Charity Commission is expected to result in greater regulatory oversight, supported by increased staffing and enhanced use of data and technology. Updated guidance has recently been issued on fundraising, trustee conflicts of interest and ex gratia payments, with further revisions anticipated on risk management and equality legislation.
What this means for leaders: Now is a good time to review governance arrangements, fundraising practices and risk management frameworks, ensuring trustees are aware of their responsibilities and any changes to regulatory expectations.
Changes to ex gratia payments
Recent reforms under the Charities Act have simplified the process for making certain ex gratia payments, giving trustees more discretion in situations where there is a recognised moral obligation to act.
What this means for leaders: Organisations should ensure they have clear policies, delegated authority arrangements and appropriate record-keeping in place to support transparent decision-making.
New flexibility for charity marketing
Changes to data protection legislation have introduced a new “soft opt-in” approach for some charity marketing communications, potentially allowing organisations to engage existing supporters more easily via email and text.
What this means for leaders: While this may create opportunities to strengthen supporter engagement and fundraising activity, organisations should review consent processes, marketing practices and data management systems to ensure compliance and maintain public confidence.
Employment law reform
Implementation of the Employment Rights Act continues through 2026 and 2027, bringing expanded employee protections and new responsibilities for employers.
What this means for leaders: Organisations should assess the potential workforce, operational and financial implications and ensure employment policies remain fit for purpose.
Financial and tax compliance
Changes introduced through recent finance legislation affect areas including charitable investments, donations, Gift Aid-related arrangements and inheritance tax relief. At the same time, HMRC is increasing its focus on compliance activity.
What this means for leaders: Strong financial governance and regular review of tax and reporting arrangements will become increasingly important, particularly for organisations with complex income streams.
Audit and reporting thresholds
Financial reporting and audit thresholds are due to increase from October 2026, potentially affecting some charities’ reporting requirements.
What this means for leaders: Finance teams should review the changes early to understand any implications for audit, reporting and governance arrangements.
Strategic considerations
Taken together, these developments point to a more complex regulatory environment for charities and VCSE organisations.
Leaders should ensure their organisations are well positioned through strong governance, robust financial oversight, effective workforce planning and a proactive approach to compliance.
If you need support navigating these changes, our experienced team is here to help. Visit our Get Support page or contact us to find out more.
