From 1 January 2018, changes to registered details will no longer be included in the annual return. Instead charities will need to use a new online update charity details service to update this information throughout the year as part of the registered particulars so that the register remains accurate.

The annual return will be limited to gathering financial and regulatory information that is relevant to each charity, with the Commission estimating that on average, charities will answer 15 fewer questions than in the past.

A consultation in autumn 2017 considered new question sets which the Commission proposed to include in the annual return. As a result the Commission says it has maintained four of the proposed question sets, amended four proposed question sets, including making some of the information voluntary for the annual return for 2018, and decided not to proceed this year with two proposed question sets.

The two options it has dropped include information about the amount of gift aid claimed by a charity from HMRC, which the Commission says is not collected by HMRC on an annual cycle or in a format which matches Commission requirements. It is now planning to discuss with HMRC how bulk data relating to gift aid can be supplied.

Secondly, the Commission has decided not to go ahead with a question on charities’ use of rate relief, despite initial research indicating there is some abuse of this relief. The regulator says it accepts that the question in its current form does not provide information to address possible abuse of charitable status, and will continue to explore the issue.

For the first time the annual return for 2018 will ask for information about income from outside the UK. Following the consultation, the Commission says it recognises that some charities will need to make changes to their financial systems to collect and sort the information required more easily and that it will take time to implement new processes.

For this reason, those parts of the question set relating to other private institutions outside the UK (other than charities, NGOs and NPOs) and individual donors outside the UK will be voluntary for the 2018 annual return but will be mandatory from annual return 2019 onwards.

To minimise the administrative burden, charities with an income of £25,000 or less will only be asked to report individual payments from individual donors or institutions outside the UK (other than charities, NGOs and NPOs) if those payments are 80% or more of the charity’s gross income for the financial year, while those with an income over £25,000 will only be asked to give the total value of all of the individual payments which are more than £25,000.

For smaller charities the threshold of an individual payment being 80% or more of gross income will mean that they will only be required to report an individual payment when it is very large.

For annual return 2018 there is also a voluntary requirement to report on methods of money transfer overseas but this will be mandatory for subsequent annual returns.

In response to public concerns, proposed new questions on executive pay in charities will be included. Annual return 2018 will ask charities to provide information about the total remuneration received by their staff members, including salary, bonuses, pension contributions, private health care and other benefits in kind.

The Commission will make public how many individuals receive total packages worth upwards of £60,000 in bands (in bands of £10,000 up to £150,000, then in bands of £50,000). The Commission will also require charities to provide information about their highest paid employee, but that information will be held for regulatory purposes, rather than made public.

David Holdsworth, deputy CEO and registrar at the Charity Commission, said: ‘I am grateful to the charities that took part in our extensive consultation on the content of annual return 2018. Today’s report shows that we have listened carefully to charities’ submissions and have made important changes as a result.

‘However, in some important areas, including around executive pay, we will require charities to provide us with more detailed information. We know the public care deeply about transparency in this area, and it is vital that charities, and the Commission as regulator, respond constructively to these expectations.’

The Commission says it is currently developing the digital service that will underpin annual return 2018, and hopes to make the return available to charities within the next four months.

The annual return must be completed by charities with annual incomes of upwards of £10,000. Annual return 2018 applies to charities with financial years ending from 1 January 2018. Charities have ten months from the end of their financial year to complete the return.

Annual return for 2018 - information collected from charities

Report by Pat Sweet