Consultation outcome

Annex 4: Annual Return 2023 guide and explanatory notes

Updated 21 December 2022

Applies to England and Wales

List of new questions for AR23	Guide lines
Was more than 70% of the charity’s income derived from one income stream in the financial period for this return?	Charities are asked to first identify their total annual income. Once they have done this, they need to identify the different ways in which income has been received such as through Local Authority grants, rental income from properties owned by the charity, or other means. Once this has been established, they should then calculate the total income received from each source to work out what percentage of total income it is. Should more than 70% have been received from one of these sources then answer yes. For example: • Total income £100,000 • Income from Local Authority grants £71,000 equates to 71% • Income from donations £29,000 equates to 29% • Answer YES • Total income £100,000 • Income from Local Authority grants £70,400 equates to 70% • Income from donations £29,600 equates to 30% • Answer NO
Has the charity received a donation(s) exceeding 25% of total income from a single corporate donor in the financial period for this return?	To answer this question a charity must identify the total income received through donations. They then need to determine who has donated the income and calculate the total amount received from each corporate donor. This number should then be converted to a percentage of overall income. If the amount received from each corporate donor is less than 25% of total income then the answer to the question is no. If the amount received from a single corporate donor exceeds 25% then the answer is yes. See glossary for definition of terms. For example: • Total income £70,000 • Donations from a single corporate donor £1,000 = 1.4% • Answer NO
Has the charity received a donation(s) exceeding 25% of total income from an individual in the financial period for this return?	To answer this question a charity must identify the total income received through donations. They then need to determine who has donated the income and calculate the total amount received from each individual donor. This number should then be converted to a percentage of overall income. If the amount received from each individual is less than 25% of total income then the answer to the question is no. If the amount received from a single individual exceeds 25% then answer to the question is yes. See glossary for definition of terms. For example: • Total income £70,000 • Donations from an individual donor £49,000 = 70% • Answer YES
Has the charity received a donation(s) exceeding 25% of total income from a single trust in the financial period for this return?	To answer this question a charity must identify the total income received through donations. They then need to determine who has donated the income and calculate the total amount received from each trust. This number should then be converted to a percentage of overall income. If the amount received from each trust is less than 25% of total income then the answer to the question is no. If the amount received from a single trust exceeds 25% then the answer is yes. See glossary for definition of terms. For example: • Total income £70,000 • Donations from a single trust £50,000 = 71% • Answer YES
Has the charity received a donation exceeding 25% of total income from a single connected party in the financial period for this return?	To answer this question a charity must identify the total income received through donations. They then need to determine who has donated the income and calculate the total amount received from each connected party. This number should then be converted to a percentage of overall income. If the amount received from each connected party is less than 25% of total income then the answer to the question is no. If the amount received from a single connected party exceeds 25% then the answer is yes. See glossary for definition of terms. For example: • Total income £70,000 • Donations from a single connected party £1,000 = 1.4% • Answer NO
For what were any of the trustees paid during the financial period for this return? a. paid for being a trustee b. paid for a role within any of the charity’s trading subsidiaries or connected organisations c. paid for providing goods and/or services [footnote 1] to the charity or any of its trading subsidiaries or connected organisations	To answer this question a charity must consider their annual accounts to determine if any trustee who served within the financial period for this annual return has received payment from the charity. This does not include payment for expenses. If payments have been made, then the charity is asked to select why they were made by using the drop-down boxes provided. Please note that if your charity provides SORP accounts then this information can be found in the notes section. See glossary for definition of terms.
Is grant making the main way your charity carries out its purposes, or not? In the financial period for this return, what percentage of total grants were made to: a. Individuals b. Other charities Are any of the above connected parties to the charity?	Some charities fulfil their objects by making grants available to beneficiaries. This could include for example other charities, enterprises, or people. In some cases, this can be the only way or the main way the charity operates. To answer this question the charity will need to identify if this is the main way that they carry out their work. If this is the case, then the charity is then asked to calculate the total value of grants that have been made in the period for this annual return. Once this has been done, they will then need to determine who the grants were made to. For this question we are interested in the value of grants as a percentage of the total that were provided to individuals and other charities. For example: • Total value of grants made £100,000 • Total grants made to individuals £50,000 equates to 50% • Total grants made to charities £50,000 equates to 50% If any of the people or charities that have received the grants are connected parties to the charity the answer to the last question should be yes. See glossary for definition of terms.
During the financial period for this annual return, did the charity receive income from outside of the UK? How was the income received by the charity? (Tick all that apply) a. Bank Transfer b. Cash Courier c. Crypto-currency d. Informal Money Transfer Systems e. Money Service Bureau f. Money Transfer without money movement (for example. Hawala) g. Online payment methods (for example Paypal) h. Third Party Transfer / Cash Courier i. A banking service other than the UK banking system j. Other	Guidance not required.
During the financial period for this annual return, did your charity operate outside England and Wales? Does the charity have formal written agreements in place with its overseas partners?	Some charities deliver services outside England and Wales. In these circumstances it is good practice to formalise any agreements with partners who are based overseas by having written agreements. This is an indication that trustees have properly protected the charity’s legal position and have acted in the charity’s best interests. The agreement should consider charity governance and demonstrate the trustees’ regard to due diligence, financial controls, safeguarding and risk management. The charity is asked to confirm that they have written agreements in place by answering yes to the question. Where they have some written agreements in place but not in all cases they can answer ‘in part’.
Does the charity use more than one address to deliver services or manage its operations? If Yes, please enter the addresses	A premises that a charity uses to deliver services may include a care home, educational facility or refuge. A premises that a charity uses to manage operations means a location used for administrative purposes such as a headquarters or office. It is possible that some charities undertake both activities from the same address. To answer this question a charity needs to identify any addresses that it currently uses to deliver services or manage its operations, other than the one provided at point of registration and to list them. This does not include trading subsidiaries or event premises such as a shop or the location of a charity event.
Are any of the charity’s websites hosted outside of the UK? In what country are your websites hosted?	Guidance not required please refer to glossary
Is the charity a federated or regional member of another registered charity?	Guidance not required please refer to glossary
Is the charity affiliated to another registered charity (such as in a consortium)?	Guidance not required please refer to glossary
Is the charity a member of any professional or umbrella bodies?	Guidance not required please refer to glossary
Does the charity have any trading subsidiaries? If Yes: During the financial period of this return, have any of the charity’s trading subsidiaries dissolved?	Guidance not required please refer to glossary
Enter the number of staff employed in total by your charity as at the end of the financial return period: a. Overseas b. In the UK This should not include staff that were contracted by the charity to deliver services on behalf of the charity What was the total amount spent on payroll during the financial period relating to this return?	Charities are required to provide headcount information routinely within their financial accounts. To answer this question charities are asked to provide a total calculation of staff directly employed by the charity within the UK as well as outside of the UK. This should not include any staff that are employed by any third parties or as part of contracted arrangements with other organisations. In addition, charities should provide the total amount spent on payroll in the period of time covered by the annual return.
Does your charity have people or organisations which act as members? Do the charity’s members have rights under the charity’s Governing Document?	Some charities have members who support them to deliver their purposes and influence a charity’s governance. Some members will also have rights under the charity’s Governing Document to be involved in collective decision making with the Trustee Board, such as voting rights. If this is the case for the charity, they should answer yes to these questions.
Does the charity provide services to children and / or adults at risk?	Guidance not required please refer to glossary
Has the charity obtained DBS checks for those that are eligible in the financial period for this return?	There are legal restrictions on who can be involved in working with children and adults at risk. The DBS (Disclosure and Barring Service) can check the criminal records of individuals. Charities can use DBS checks to ensure that all those who are eligible are suitable for the role or activity they are undertaking. Different levels of DBS check should be undertaken depending on the role or activity that the individual undertakes for the charity. Trustees should use the DBS Eligibility Tool to check which roles and activities could be eligible for a basic, standard or enhanced DBS check: DBS eligibility guidance - GOV.UK (www.gov.uk).
Have there been any events over the financial period for this return that have impacted the charity’s ability to operate effectively? If yes, please indicate the impact of the event by using the dropdown lists below: Estimated positive impact on or increases in: a. Donations b. Fundraising activities c. Other income i.e., grants d. Expenditure e. Number of volunteers f. Number of employees g. Number of trustees h. Total service demand Estimated negative impact or decreases in: a. Donations b. Fundraising activities c.Other income i.e., grants d. Expenditure e. Number of volunteers f. Number of employees g. Number of trustees h. Total service demand	This question will be used in exceptional circumstances where an event has happened within the period of the annual return that has significantly impacted the entire sector and its ability to deliver services. Charities will be provided with information on what this question will cover as part of the wider annual return process and in advance of the annual release. They should then consider the list of potential impacts from both negative and positive standpoints in relation to the topic referenced within the annual return.

1. NB: By the time of AR23 the law is expected to have changed to allow trustees to be paid for goods as well as services, although this is not allowed currently. ↩