What am I personally liable for as a charity trustee?

England and Wales: This page sets out the position in full. Scotland: partly covered — the duties, the third-party position and the route to being excused a breach are all established, but no Scottish regulator statement was found that says in its own terms what England and Wales says plainly, that a trustee can be liable to their own charity; read the England and Wales section on that one point as a pointer, not as Scots law. Northern Ireland: covered — the absence of a statutory duty list, the structure-by-structure liability picture and the Commission’s power to excuse a breach are all established from the 2008 Act and CCNI’s own current guidance.

Who can a charity trustee be liable to?

A charity trustee can be liable in two directions. One is to the charity itself, and the other is to third parties.

The third-party half turns on the charity’s legal form. If that is still open, choose your legal structure first; this page assumes the choice is made. The short version of the whole question is on trustee personal liability.

This page covers both for trustees in England and Wales. There, the Charity Commission’s guidance is the main source. Then it covers Scotland and Northern Ireland.

Trustee liability to the charity comes first. It is the half that incorporation does not change.

You do not have to take our word for how real this is. The National Lottery Community Fund warns unincorporated applicants on its Reaching Communities England eligibility page. It says, verbatim:

“Unincorporated groups: You can still apply. But before managing funding of this size, it’s worth thinking about whether becoming an incorporated organisation is right for you… your trustees or members can be personally responsible for things like unpaid debts.”

That is a funder warning people at the point of application, not a lawyer warning them after a problem. It is worth more than any invented example. It points at the right half of the subject: who the liability runs to.

The two directions work differently.

• Liability to your own charity. You caused it a loss. This reaches every legal form.
• Liability to a third party. A creditor, an employee, someone hurt on your premises. This is the half incorporation changes.

Almost every wrong answer here comes from treating the second as if it answered the first.

Trustee liability to the charity, whatever the legal form

A trustee can be liable to their own charity for a loss they cause, whatever the charity’s legal form. This is the point the page exists to fix. CC3 §10.1 says:

“Trustees can be held liable to their charity for any financial loss they cause or help to cause. This applies to any type of charity whatever its legal form.”

So “we are a CIO, we cannot be personally liable” is wrong. It is wrong in the direction that hurts. It leads a board to take risks it would not take if it knew the position.

The Commission takes the same care over scale. Its sentence should be kept whole.

CC3’s own words are that it is “extremely rare, but not impossible, for charity trustees to be held personally liable”. Both halves of that are true. Anything that gives you only the first half is not being straight with you.

CC3 also records what happens in practice. The Commission and the courts “rarely enforce liability on an unpaid trustee who has made an honest mistake”. They also “expect higher standards from trustees who act in a professional capacity or are paid”.

Two limits on that protection are stated in CC3 and almost always dropped:

“Trustees who receive an unauthorised payment or benefit from their charity have a duty to account for (ie repay) it. The Commission can’t relieve trustees from this duty.”
“There is no legal protection for trustees who have acted dishonestly, negligently or recklessly.”

Read the middle word of the second one. Sector writing gives that list as “dishonestly or recklessly” and drops negligence. Negligence is a much lower bar than either of the others. Dropping it plays down what you are carrying.

The duties behind those liabilities are a separate subject. This guide gives them their own page. The trustee duties explains the 6 the Commission sets out for England and Wales, and what Scotland and Northern Ireland do instead.

Liability to third parties: the half your structure decides

Your personal liability to a creditor, an employee or an injured visitor turns on one thing. That is whether the charity is incorporated. CC3 names the claims:

• breaches of an employee’s terms, conditions or rights
• failing to pay for goods or services or to fulfil a contract
• a member of the public injured on the premises
• liability to a staff pension scheme

If the charity is incorporated, the charity itself is liable for the claim. If it is unincorporated, CC3 is blunt:

“the trustees have to sign contracts and other agreements personally, and will have to meet any claim. The charity can normally meet any liabilities that you incur as a trustee provided you have acted honestly and reasonably… but if you incur liabilities that exceed the value of the charity’s assets, you could be liable for any amount that the charity can’t cover.”

Note what is missing from that: a cap. Only the size of the charity’s assets limits your exposure. Nothing else does. What happens when the charity cannot pay its debts is covered in what happens if the charity cannot pay.

CC3’s own table sets out what each structure does. Here is every row, summarised in our words, because the columns only make sense together:

Trust — unincorporated; land held by the trustees; contracts in the trustees’ own names; liability to third parties not limited.
Association — unincorporated; land held by the trustees; contracts in the trustees’ own names; liability to third parties not limited.
Company — incorporated; land and contracts in the charity’s own name; liability to third parties limited; company law duties on top.
CIO — incorporated; land and contracts in the charity’s own name; liability to third parties limited; Charities Act and CIO regulations on top.
Corporation created by Act of Parliament — incorporated; land and contracts in the charity’s own name; liability limited unless the Act excludes it.
Royal charter body — incorporated; land and contracts in the charity’s own name; incorporation gives some protection.
Community Benefit Society — incorporated; land and contracts in the charity’s own name; liability to third parties limited; Co-operative and Community Benefit Societies Act duties on top.

The heading on that column is “Liability to third parties limited”. It is not “trustees are not personally liable”. Nothing in the table touches liability to the charity itself.

CC3 adds a sentence worth sitting with: “The law places duties on board members to prevent the abuse of limited liability.” Limited liability comes with duties attached. It is not simply a shield.

For an unincorporated charity with staff or contracts, CC3 says that “the trustees should seriously consider changing the charity into an incorporated form”. That is the Commission’s word, and a should under its own convention.

It comes with a warning. Incorporation can itself trigger a pension liability. That is why the decision belongs on its own page: decide your liability position, which weighs incorporation against trustee indemnity insurance. It is a matter for advice, not a form to fill in.

When can the Charity Commission excuse a breach?

The Commission can excuse an honest and reasonable breach. But it cannot excuse personal contractual liability. Charities Act 2011 s.191 lets the Commission relieve a trustee from personal liability for a breach of trust or breach of duty. The statutory test, s.191(2) verbatim, is that the person:

“has acted honestly and reasonably and ought fairly to be excused for the breach of trust or duty”

Quote the statute, not the gloss. CC3 says the Commission and the courts “can relieve trustees from liability if they have acted honestly and reasonably and have not benefited from their actions”. Those last words are the regulator’s shorthand. They are not in the section. Most wrong answers here come from publishing a plain-English summary as the statutory test.

Then there is s.191(4), and it is decisive:

“Subsection (2) does not apply in relation to any personal contractual liability of a charity trustee or trustee for a charity.”

That one subsection is the whole story for an unincorporated charity. Its trustees’ biggest real exposure is contractual: a lease, an employment contract, a supplier agreement. They sign these in their own names because the charity has no legal personality.

The Commission’s power does not reach any of it. Relief covers the liability an unincorporated charity is least likely to face. It does not cover the one it is most likely to face.

Keep three more things in mind. Relief may cover the whole loss or only part of it, on such terms as the Commission thinks fit (s.191(3)).

s.191(4) is the section’s only express exclusion. The duty to repay an unauthorised payment or benefit comes from CC3, not the section. It flows from the equitable duty to account and is not a carve-out in the statute.

And two court routes stay in place under s.191(6). These are Trustee Act 1925 s.61 for trustees, and Companies Act 2006 s.1157 for company officers and auditors. The Commission is not the only door.

Scotland: statutory duties, and relief from a court only

Scotland’s duties are not guidance. Under s.66(1) of the 2005 Act, a charity trustee must act in the interests of the charity. They must also seek in good faith to keep it acting consistently with its purposes.

A Scottish charity trustee must also act with the care and diligence reasonable for someone managing another person’s affairs. Where a conflict of interest arises between the charity and whoever appointed them, they must put the charity first. If another duty prevents that, they must declare the interest and stay out of the decision. Two further subsections have no English counterpart at all:

s.66(4): “Any breach of the duty under subsection (1) or (2) is to be treated as being misconduct in the administration of the charity.”
s.66(5): “All charity trustees must take such steps as are reasonably practicable for the purposes of ensuring— (a) that any breach of a duty under subsection (1) or (2) is corrected by the trustee concerned and not repeated, and (b) that any trustee who has been in serious or persistent breach of either or both of those duties is removed as a trustee.”

Read s.66(5) twice. In Scotland, failing to deal with a co-trustee who keeps breaching is itself your breach.

The bigger difference is who can excuse you. England and Wales has three routes. One of them is the regulator itself.

Scotland has one route, and it is a court. Trusts (Scotland) Act 1921 s.32 lets the court relieve a trustee who “has acted honestly and reasonably, and ought fairly to be excused for the breach of trust”. That is almost the same formula as s.191(2), from the same common ancestry.

No provision of the 2005 Act was found giving OSCR an administrative power to do the same. So a Scottish trustee seeking relief goes to court. There is no regulator route to the same result.

Section 32 carries no equivalent of the s.191(4) contractual carve-out. It is expressed with no subject-matter exclusion at all. Whether Scots law treats contractual liability the same way here was not established. This page does not assume it either way.

Third-party liability works the same way as in England and Wales. A SCIO becomes a body corporate with its own legal personality when OSCR enters it in the Register. So contracts are in the SCIO’s name.

An unincorporated Scottish charity’s trustees sign in their own names and are personally liable. The shortfall above the charity’s assets falls on them.

The table for Scotland is this project’s own, built from three sources. No single OSCR document sets the Scottish structures side by side against liability the way CC3’s table does.

Structure (Scotland)	Contracts signed in	Third-party liability	Relief from liability
Unincorporated trust or association	The trustees’ own names	Not limited	By a court only, under s.32
SCIO	The SCIO’s own name	Limited	By a court only, under s.32
Charitable company	The charity’s own name	Limited	The same UK-wide court routes as England and Wales, because company law is reserved

One thing was not established, and this page does not fill it in. No OSCR statement found says, in its own terms, that a Scottish trustee can be personally liable to their own charity for a loss. CC3 says it that way for England and Wales.

The s.66 duty and the general Scots law of breach of trust govern the question. Do not read the CC3 sentence across as if it were Scottish authority.

Northern Ireland: liability arranged by structure

Northern Ireland follows the English pattern on duties, not the Scottish one. The Charities Act (Northern Ireland) 2008 contains no free-standing statutory list of general trustee duties.

A Northern Irish trustee’s duties come from general law, by structure. The Trustee Acts apply to unincorporated charities and trusts. The Companies Act 2006 applies to charitable companies.

CCNI does not leave the space empty. Its Guide 2 organises the ground around breach of duty and breach of trust. It also names a free-standing fiduciary duty. That duty covers confidentiality, managing conflicts of interest, and not profiting from the position.

Guide 5 then sorts liability by legal structure, not by who the liability runs to. This helps if you look for the material the way CCNI files it:

• Unincorporated association — trustees hold property and contract on the charity’s behalf, and “can be held personally, legally responsible for what your charity does”.
• Charitable company — limited liability for debts and legal action, typically set at a nominal amount in the governing document. It protects decisions made “openly, honestly and to the best of your ability”, and never fraud or deliberate wrongdoing.
• Charitable trust — trustees share legal responsibility for the trust and hold property on the charity’s behalf.

There is no fourth row. Northern Ireland has no CIO, because Part 11 of the 2008 Act never came into force. So the incorporated option is a charitable company.

CCNI’s own protective advice is a should, in its words. You should always follow the appropriate rules and guidance, because if you have, “your charity will usually cover your liability”. And you should always act in an honest and reasonable way.

Two formal routes sit behind that. Charities Act (Northern Ireland) 2008 s.91 covers a trustee, auditor or examiner. It lets the Commission relieve one who “acted honestly and reasonably and ought fairly to be excused for the breach”.

The s.91 power is in form the same as s.191. It includes the same exclusion of personal contractual liability, at s.91(4).

The second is indemnity insurance bought in advance. That belongs to deciding your liability position rather than to this page.

Common mistake: believing a CIO or a charitable company means trustees cannot be personally liable

The structure comparison tables everyone reads are headed “liability to third parties limited”. The qualifier falls off somewhere between the table and the conversation. Liability to your own charity applies in any legal form. A board that believes otherwise takes risks it would not take if it knew.

Common mistake: assuming the Commission can excuse any honest mistake

The “acted honestly and reasonably” test is quoted everywhere without its statutory wording or its limits. The statute adds “and ought fairly to be excused for the breach of trust or duty”. And s.191(4) removes personal contractual liability from the power altogether. That is the main exposure for an unincorporated charity.

Separately, CC3 says a trustee who receives an unauthorised payment or benefit has a duty to repay it. CC3 also says the Commission cannot relieve them of that. That point is CC3’s. It flows from the duty to account and is not a carve-out in s.191.

Worked example

Wrenfield Village Hall is an unincorporated association. Its committee signs a three-year lease on a community hall. Two years in, income collapses and the charity cannot pay the rent.

The trustees signed in their own names. So the landlord’s claim is against them. The charity’s assets go first. The shortfall above them falls on the trustees personally.

They apply to the Commission for relief. They are told the power does not reach them. The liability is contractual, and s.191(4) takes contractual liability outside s.191(2) entirely.

Nothing about their conduct is in question. The exposure follows from a signature, not from a mistake.

Had Wrenfield been a CIO, the lease would have been in the charity’s name. The claim would have gone to the charity. That is the decision the funder quoted at the top of this page is pointing at. The decision is cheapest to make before the lease, not after it.

You now know what each trustee is taking on; the next step is to check every trustee’s eligibility before anyone takes office.