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The new Charities Act is a radical revision of Charity law, with all organisations being required to demonstrate both that they have 'charitable purposes' and that they provide a public benefit in order to be legally defined as a charity.

The Charities Bill for England and Wales has taken a long time to get through the parliamentary process, but it received Royal Assent on November 8th 2006 and is now law.

A parallel process is taking place in Scotland, where the Charities and Trustee Investment (Scotland) Bill was passed by the Scottish Parliament on June 9th 2005 and received Royal Assent in July 2005.

Some of the key questions and areas of contention in the debates on the Charity Act for England and Wales concerned the definition that will be used of ‘public benefit’ and how this will impact on the status of public schools and fee-charging hospitals. Many individuals believe that since these cater only to the well-off they should not enjoy the same tax advantages as charities helping those in need.

The Act also modernises the functions and powers of the Charity Commission, which is the body likely to implement the public benefit 'test'.

Most of the Act is non-controversial, and the changes (designed to cut the red tape surrounding charity registration) have been welcomed across the voluntary sector.

The Act will create a number of opportunities for charities and may extend the scope of the sector, but is also likely to create challenges in the short term as it is implemented.