Charities monthly round-up – February 2026

Raindrops keep falling on my head… and I can’t remember the last time the weather behaved itself!

But at least we have made it through January (the month that lasts approximately 11 weeks). And though the weather may be questionable, we’re back to bring a bit of sunshine to 2026 with February’s edition of our Charities Newsletter.

To start us off, we have updates from the employment world, a foray into the wonderful world of fundraising and a big update from the Charity Commission exercising a power it rarely deploys. Buckle up; it is about to get interesting!

When are volunteers considered workers? Be wary of murky waters…

Volunteers are the lifeline of charities across the UK; the time and effort they give allows incredible things to be achieved. However, in the eyes of the law, there is a thin dividing line between being a volunteer and being classed as a worker, and with that comes a number of workers’ rights charities need to be aware of.

With that in mind, the recent Court of Appeal case of Maritime and Coastguard Agency v Groom is one that charities would be wise to learn from.

Katherine Sinclair, a legal director in our employment and pensions team, and Esther Campsall, senior associate in our Charities team, have written an excellent blog post regarding the outcome of this decision and what it means for your charity.

When is a volunteer a worker?

Put simply, if a volunteer receives any form of remuneration or payment for the activities they undertake as a volunteer, over and above reasonable expenses (such as travel costs), they may be classified as a worker.

What happened in this case?

Mr Groom was a coastguard rescue officer (CRO) for over 40 years at the Maritime and Coastguard Agency (MCA) and in 2020 his position was terminated. As part of Mr Groom’s role as CRO, the MCA allowed for payment for certain activities – ‘compensation for any disruption to personal life and employment’ as it was described. Bear in mind, these payments had to be claimed – they were not given automatically – but when they were claimed, CROs received payslips and an annual P60.

When Mr Groom requested a union representative to attend his disciplinary appeal hearing at the MCA in July 2020, the MCA refused on the basis Mr Groom was not a worker. Accordingly, the dismissal appeal hearing was unsuccessful for Mr Groom, and a claim ensued.

Fast forward to the Court of Appeal’s judgment, and the court confirmed the following:

• Mr Groom was a worker each time he carried out an activity for the MCA in his position as a CRO;

• in performing these activities, Mr Groom had to follow reasonable instructions and could claim remuneration (even if optional) – the court saw this as an intention to ‘create legal relations’, and therefore created a contract;

• when Mr Groom did not carry out activities, there was no contract during this time meaning worker status only arose when an activity was undertaken; and

• the payment structure of MCA went beyond reimbursement of volunteer expenses, and amounted to remuneration.

What does this mean for charities?

Volunteers have few employment rights. Workers, however, are entitled to the national minimum wage, paid holiday and rest breaks, to name a few. Charities should be conscious of:

• Benefits in kind: These are payments which are not monetary, but may be considered payment and create an employer-worker relationship.

• Job titles: Calling someone ‘a volunteer’ is not determinative; what matters is how the arrangement looks in practice. Whilst someone’s title may be ‘volunteer’, if they are reimbursed above their reasonable expenses, there is a risk they could be a worker.

• Optional activities: As the court confirmed in this matter, the fact that an individual has the choice to perform an activity is irrelevant. When they do take on the activity, what counts is whether they are paid beyond reasonable expenses.

Concerned about your volunteer arrangements at your charity or seeking support with reviewing your internal policies and procedures surrounding volunteers? Our employment and charities teams are on hand to help. Please contact Katherine Sinclair, Libby Hubbard, Esther Campsall or your usual AC contact.

Charity Governance and Equality Act 2010 – Commission responds to open letter

Almost a year on from the Supreme Court’s ruling in For Women Scotland v Scottish Ministers, many charities still find themselves operating without clear, updated guidance on how the Equality Act 2010 should be applied in practice. With the EHRC’s revised statutory Code still awaiting government approval, organisations are trying to balance legal obligations, staff concerns and service‑user expectations in what has become an increasingly complex and sensitive area.

In our recent joint blog post, Libby Hubbard (professional support lawyer in our employment and pensions team) and I unpack the implications of the judgment for both charity governance and employment practice. We explore what the decision does and does not change, highlight the emerging themes from recent tribunal cases and set out proportionate steps charities can take while we wait for authoritative guidance from the EHRC and Charity Commission.

If your organisation provides single‑sex services, uses positive‑action measures, manages gender‑specific spaces, or is simply trying to make measured, lawful and inclusive decisions in a period of ongoing uncertainty, this is essential reading.

You (fund)raise me up

Where to begin (aside from a cheesy pun)… it all appears to be happening on the fundraising front. Let’s get stuck in!

Regulator finds breach of code

Donations are a core part of a charity’s funding. From large grants from sophisticated grantmakers, to donations from members of the public – money really does make the charity world go around. However, pause and ask yourself this: when a member of the public comes calling, looking to make a donation, what checks do you do before graciously accepting their kindness?

A recent enquiry conducted by the Fundraising Regulator found that a donation accepted by the Universal Church of the Kingdom of God (UCKG) breached the Code of Fundraising Practice, in relation to a substantial donation taken from an individual in ‘vulnerable circumstances’. The case centred on a woman with known mental health difficulties who made a large ‘offering’ to the church and, although UCKG described this payment as a religious expression rather than a charitable donation, the Regulator found it was a charitable donation, particularly since the church claimed Gift Aid on such contributions.

The investigation concluded that UCKG failed to consider the donor’s vulnerabilities, had no policies or training for supporting potentially vulnerable donors and did not adequately assess whether the donor could make an informed decision at the time. As a result, the Regulator determined that UCKG breached the fundraising code, including rules designed to protect those who may be at risk due to mental health or other circumstances.

There are important lessons trustees can take away from this inquiry:

• Transparency: It is important charities understand how they encourage donations to be made, and even more important to ensure they are compliant with the Fundraising Code.

• Policies and procedures: Does your charity have any guidance on how donations should be vetted? Are there any criteria in place to assess whether the charity should accept the donation in the first instance? Where a donation is mistakenly accepted, have the trustees considered whether the charity should refund this (Charity Commission guidance on such moral/ex gratia payment can be found here).

• ‘Offerings’ fall within the scope of regulated fundraising: If an organisation receives voluntary gifts, and especially if it claims Gift Aid, those gifts will be treated as charitable donations and must comply with the code. This is particularly important for faith-based organisations where giving is often intertwined with spiritual practice.

• Campaigns of faith: Particular care should be taken where charities fundraise through a campaign of faith involving testimonies from individuals regarding past difficulties and how these were overcome. The Fundraising Regulator considers this a high-risk fundraising strategy and appropriate protections need to be in place. Charities should consider how this may impact speakers and listeners, and how they ensure donors are treated fairly.

Taking the fun out of fundraising

Clearly setting out what you are fundraising for is a vital for determining what the funds raised can be used for. If a particular purpose is set out, the funds become restricted to be used in that specified manner. With that in mind, it is important to ensure that your appeal reflects both what you intend to use the funds for and what will happen if plans change, not enough funds are raised or there is a surplus.

It is on that note the Charity Commission have updated their fundraising guidance to clarify the importance of being clear from the outset when fundraising. Trustees should consider:

• Purpose: What are you raising funds for? Have you planned for what may happen if you exceed or do not meet the target you have set. Has this alternative been stated clearly in your fundraising appeal.

• Records: When raising funds, charities should ensure they are maintaining an accurate record of donors, how the donation was made, how much it was amongst other matters advised by the Commission’s guidance. Do you have appropriate practices in place to collect this information? Are your practices compliant with data protection rules?

• Compliance: In addition to the Commission’s guidance, fundraising efforts should be made with the Fundraising Code in mind. Are your policies and procedures compliant? How will you monitor compliance?

Considering your approach to fundraising and looking for support? Have no fear, for we are here. Please do contact Emma Watt, senior associate, or your usual AC contact.

Soft opt-in marketing comes into force… finally!

Do you use digital marketing for your charity, or are you looking to expand your digital reach? Then we have good news: the soft-opt in for marketing communications has been expanded to include charities from 5 February 2026, thanks to the Data (Use and Access) Act 2025.

As a reminder, the soft opt-in will allow charities to send email marketing to individuals who have previously engaged with that charity and have not opted out, creating valuable opportunities for supporter engagement, fundraising growth and more efficient communication. Trustees will need to take care not to over‑contact individuals and must ensure that charitable marketing is kept distinct from commercial communications.

Ben Pumphrey, legal director in our data governance team, previously authored an excellent blog post explaining the changes and what they could mean for your charity.

Thinking about how the soft opt-in rule can benefit your charity and not sure where to start? Please contact Ben Pumphrey, Odije Paul or your usual AC contact.

Banging heads together – Charity Commission merges two disputing charities

In a highly unusual move, the Commission recently exercised its Scheme making powers to create a new governing document and merge two disputing charities into one organisation. This rare regulatory action was taken to address years of governance failings and internal disputes affecting Dudley Central Mosque and Muslim Community Centre and the Muslim Community Centre and Mosque 1977.

What led to this?

This decision comes after multiple statutory inquiries; the Commission opened an inquiry into Dudley Central Mosque in July 2022 due to repeated failures to meet accounting requirements, and a further inquiry into the unregistered 1977 charity in April 2025 amid concerns that disputes between the two bodies posed a risk to charity property. Both inquiries remain ongoing.

In a move not used in over 20 years, the Commission created a new governing document for the merged charity, combining workable elements of both organisations’ former governing documents. This new framework sets out clear rules on trustee elections, decision‑making, roles and responsibilities, and membership, aimed at restoring transparency and ensuring the charity operates effectively and lawfully. The scheme will ensure the land is retained as a form of permanent endowment and only used for religious, community and educational purposes. You can read the Charity Commission’s blog post about action here.

This is a clear reminder that long‑running governance problems don’t fix themselves, and leaving them unaddressed can ultimately lead to significant regulatory intervention. But you don’t need to wait for the regulator to step in. Most of the issues resolved in this matter (confusing structures, unclear trustee roles, outdated or unworkable governing documents and unresolved disputes) are all matters that charities can and should address proactively.

If your structure is confusing, your governing document is outdated, or trustee disputes are dragging on, help is at hand. Please contact Edwina Turner, Katie Crosbie or your usual AC contact.

The VAT is being sealed – Churches set to lose tax exemption

The Government has announced the Listed Places of Worship Scheme, which allowed churches to reclaim VAT on repairs to listed buildings, is due to end on 31 March 2026. In its place: the new Places of Worship Renewal Fund – a £92m (in total) fund intended to support churches and give them identical levels of support as sites of national importance.

Whilst it is not fully clear how the scheme will work in practice, this marks an important change for church renovation projects.

Key takeaways

Trustees will need to ensure they are planning ahead ready for the closure of the Listed Places of Worship Scheme – 31 March is not that far away. As part of this, trustees should consider:

• Funding arrangements – Trustees will need to factor in the lack of a VAT exemption when planning for the year and projects ahead. How will these be funded? How will the church plug the gap the Listed Places of Worship Scheme may have otherwise filled? How will the church enhance its sources of funding and ensure these are sustainable? How will this divert the time and resources offered by volunteers?

• Ensure final claims are submitted – The Listed Places of Worship Scheme will come to a close at 23:59 on 31 March 2026. Churches who have been relying on this scheme will need to ensure their final claims are submitted by this deadline. You can find more information on the Department for Culture, Media and Sport’s website here.

Changes to Companies House fees

As seems to be the case with almost everything lately, the cost of filing at Companies House has gone up!

Effective from 1 February 2026, a number of fees have increased including:-

• confirmation statement filing fee – now £50 (digital) and £110 (paper)

• same day change of name – now £85 (digital)

• registration of a charge – now £14 (digital)

You can read the full list of fee changes here.

Looking for support with your company secretarial services and Companies House filing? Please contact Charlie Maddox, executive in our charities governance team, or your usual AC contact.

Employment Rights Act

We still can’t quite believe it, but as we reported in the January edition of our newsletter, the Employment Rights Bill finally graduated into the Employment Rights Act (don’t they grow up fast? We’re all so proud!). But of course, the journey doesn’t stop there.

Reliable as ever, our Libby Hubbard has been reflecting on the timeline of what is to be implemented and when. Some of the key dates include:

• fire and rehire protections and changes to unfair dismissal have been pushed back to 1 January 2027;

• some trade union measures come into force on 18 February; and

• April, which is packed with changes to the likes of Statutory Sick Pay, Paternity and Parental Leave and Collective redundancy.

To find out more about what the road ahead looks like for the Employment Rights Act, read Libby’s blog post.

It is more important than ever to stay up-to-date with the Employment Rights Act and the changes it will be bringing in (and when). If you are not already subscribed to the Employment Rights Hub, you can do that here. For more specific advice on any of these changes or training for your organisation, please contact Libby Hubbard or your usual AC Employment contact.

For more information

For more information or advice on the topics covered in this month’s newsletter, please get in touch with your usual AC contact.