Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of changing from a motive or purpose test to an outcome test as outlined in the draft Finance Bill 2025–26 on the volume of charity donations.

This question was answered on 20th October 2025
Charities rightly enjoy generous tax reliefs. However, a small number of charities are receiving tax relief in ways that were not intended by Parliament. Charity tax rules are being strengthened to improve HMRC’s ability to challenge abusive arrangements in an appropriate and proportionate way.

The new charity rules in the Finance Bill 2025-26 for legacy giving will ensure a charity uses tax relieved income for its charitable purposes. They will not require charities to spend gifts from wills within a set timeframe.

The new rules will replace the current purpose test with an outcome test. This will better prevent the abuse of tax reliefs through arrangements designed to give financial advantages to donors in return for their donation.

Updated guidance will support charities and donors, giving clarity and reassurance around the rules and making it clear that the honest majority of donors and charities will remain unaffected by these reforms.