Becoming a trustee of a Scottish charity is both a privilege and a responsibility. Trustees play a crucial role in ensuring that a charity operates effectively, transparently, and in line with its legal and charitable objectives. Apple Grow provides practical guidance to help trustees understand their duties, with a particular focus on governance, accounting, and reporting requirements.
Whether you are already acting as a trustee or considering taking on the role, it is important to understand the commitments involved and the standards expected of you.
Scottish charities are regulated by the Office of the Scottish Charity Regulator (OSCR). OSCR is an independent body responsible for maintaining the Scottish Charity Register and ensuring that charities operate in the public interest.
Its role includes:
Monitoring compliance with charity law
Providing guidance to trustees
Ensuring transparency and accountability within the charity sector
Trustees are expected to be familiar with OSCR guidance and to comply with all regulatory requirements.
Under the Charities and Trustee Investment Act (Scotland) 2005, charities can be structured in several ways:
Charitable companies – incorporated under company law
Scottish Charitable Incorporated Organisations (SCIOs) – incorporated under Scottish charity law
Unincorporated charities – often governed by a trust deed or constitution
Each structure carries different legal and reporting obligations. The charity’s structure determines the extent of trustee responsibilities and the level of external scrutiny required.
A trustee is defined as anyone who has overall control and management of a charity. This typically includes:
Management committee members of unincorporated charities or SCIOs
Directors or committee members of charitable companies
All trustees share equal responsibility for ensuring the charity acts in line with its stated charitable purposes.
Trustees must act in the best interests of the charity at all times. Key restrictions include:
Trustees must not benefit personally from the charity
Trustees should not be paid for acting as trustees (with limited statutory exceptions)
Only reasonable out-of-pocket expenses may be reimbursed
Failure to act prudently, lawfully, or in accordance with the governing document can result in trustees being held personally liable for losses suffered by the charity.
Trustees have a general duty to act in the interests of the charity. This includes:
Ensuring activities align with the charity’s purposes
Complying with charity law and the governing document
Acting with care, skill, and diligence
Managing conflicts of interest appropriately
Trustees must ensure that all funds are used solely to further the charity’s objectives and that proper records are maintained to demonstrate this.
Trustees are collectively responsible for:
Keeping charity details up to date on the Scottish Charity Register
Submitting annual returns, accounts, and reports to OSCR
Maintaining accurate financial and accounting records
Overseeing fundraising activities
Providing clear and accurate information to the public
No single trustee holds greater responsibility than another, regardless of role or title.
Scottish charities are required to:
Maintain full and accurate accounting records
Prepare annual accounts and a trustees’ report
Arrange an audit or independent examination where required
Submit accounts and reports to OSCR (and Companies House where applicable)
The exact requirements depend on the charity’s structure and income level.
Charities may hold different types of funds, including:
Unrestricted funds – usable for general charitable purposes
Restricted funds – limited to specific purposes set by donors
Trustees must ensure that restricted funds are used strictly in accordance with donor intentions.
Trustees are responsible for overseeing fundraising activities and ensuring they comply with recognised standards. In Scotland, fundraising practices are monitored in line with the Code of Fundraising Practice, and trustees must address any complaints appropriately.
A charity’s annual report and accounts usually include:
A trustees’ report
A statement of financial activities
Income and expenditure accounts (where applicable)
A balance sheet
Cashflow statement
Notes explaining accounting policies
These documents provide transparency and accountability to regulators, donors, and the public.
Audit requirements depend on income levels:
Charities with income over £500,000 generally require an audit
Smaller charities usually require an independent examination
Where accruals accounts are prepared, the examiner must be suitably qualified
Additional criteria may apply based on asset levels and structure.
Charities must prepare accounts that show a true and fair view of their financial position. Most charities are required to follow the Charities Statement of Recommended Practice (SORP).
Smaller unincorporated charities with income below £250,000 may prepare receipts and payments accounts
All others must prepare accruals-based accounts in line with SORP
Trustees should ensure that the chosen accounting framework is appropriate for their charity.
Apple Grow supports trustees and charities by providing clear, practical guidance on:
Trustee responsibilities and governance
Charity accounting and reporting requirements
Audit and independent examination preparation
Regulatory compliance and best practice
If you would like tailored support or clarification on any aspect of trustee duties or charity reporting, Apple Grow is here to help.
A capital gain arises when a chargeable asset is sold for more than its original cost. The gain is calculated as:
Sale proceeds (less selling costs)
minus
Purchase price (including acquisition costs)
CGT applies to assets such as shares, business assets, investment property, and certain personal possessions.
For the 2025/26 tax year, CGT rates depend on your total taxable income and gains:
18% on gains that fall within the basic rate income tax band
24% on gains above the basic rate band
These rates apply to most assets, subject to specific exceptions and reliefs.
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can significantly reduce CGT on qualifying business disposals.
For 2025/26:
Qualifying gains are taxed at an effective rate of 14%
The lifetime limit for BADR is £1 million
The rate will increase to 18% from 2026/27
BADR may apply to:
The sale of a sole trade or partnership business
Shares in a personal trading company
Assets used in a business that has ceased within the last three years
Associated disposals (such as personally owned property used in a business) may also qualify, although restrictions can apply, particularly where rent has been charged.
To qualify for BADR on company shares:
You must have been an employee or director
You must hold at least 5% of ordinary share capital
You must hold at least 5% of voting rights
Additional distribution or proceeds tests must be met
The qualifying ownership period is two years leading up to the date of disposal.
Where a shareholder’s holding falls below 5% due to fundraising through new share issues, BADR may still be protected. An election can be made to crystallise the gain before dilution, with the option to defer tax until the shares are actually sold.
This area requires careful planning.
Investors’ Relief is designed for external investors in unlisted trading companies.
Key conditions include:
Shares must be newly issued for cash
The company must be unlisted and trading
Shares must be held for at least three years
The CGT rate under Investors’ Relief is:
14% for 2025/26
Increasing to 18% from 2026/27
The lifetime limit for IR is £1 million.
Each individual can realise gains up to the £3,000 annual exemption (2025/26) without paying CGT. Couples should consider planning disposals jointly to maximise the use of both exemptions.
Shares of the same class in the same company are treated as one pooled asset. However:
Same-day transactions are matched first
Purchases within 30 days after disposal are matched next
Remaining shares are matched from the pooled holding
These rules are designed to prevent short-term tax planning.
Additional reliefs may include:
Private Residence Relief
Business Asset Rollover Relief
Gift Holdover Relief
Offset of carried-forward capital losses
Some disposals, such as those involving EIS, VCTs, or share exchanges, can be complex and should be reviewed in advance.
Capital gains tax planning should always be done before an asset is sold. Early advice can significantly reduce tax exposure and avoid unexpected liabilities.
Applegrow can help you:
Identify available CGT reliefs
Plan business or investment disposals
Structure transactions tax-efficiently
Ensure compliance with current legislation
Get expert guidance to manage charity trustee responsibilities with confidence
