Understanding OSCR and Scottish charity regulation

Scotland has its own charity regulator, its own charity law, and its own approach to charity governance. If you run a charity in Scotland, or are thinking about setting one up, understanding this regulatory landscape is essential. The framework differs from England and Wales in several important ways, and the Charities (Regulation and Administration) (Scotland) Act 2023 introduced the most significant changes in nearly two decades.

Why Scotland has its own charity regulator

Charity regulation is a devolved matter under the Scotland Act 1998. The Scottish Parliament has full legislative competence over charities operating in Scotland, and OSCR (the Office of the Scottish Charity Regulator) was established under the Charities and Trustee Investment (Scotland) Act 2005 as the independent regulator and registrar of Scottish charities.

OSCR is accountable to the Scottish Parliament, not the UK Parliament. Its powers, duties, and approach are shaped by Scottish legislation, Scottish court decisions, and the priorities of the Scottish Government. This means charity law and practice can and does diverge between Scotland and the rest of the UK.

What OSCR does

OSCR has four core functions:

• Registration: Deciding whether organisations meet the charity test and should be entered on the Scottish Charity Register
• Monitoring: Reviewing annual returns and accounts to identify governance concerns or non-compliance
• Investigation: Conducting inquiries into charities where there is evidence of misconduct, mismanagement, or failure to meet the charity test
• Guidance: Publishing guidance to help charity trustees understand and fulfil their legal duties

The key legislation

Scottish charity law rests on two principal Acts:

Charities and Trustee Investment (Scotland) Act 2005

This is the foundation of modern Scottish charity regulation. It established OSCR, defined the charity test (charitable purposes plus public benefit), created the SCIO legal form, set out trustee duties, and gave OSCR its regulatory powers. It replaced the previous patchwork of common law and older statutes that had governed Scottish charities.

Charities (Regulation and Administration) (Scotland) Act 2023

This Act, which came into force in stages from 2023, was the Scottish Government's response to concerns that OSCR's powers were insufficient for modern charity regulation. It made several important changes:

• Strengthened OSCR's inquiry powers: OSCR can now suspend trustees during an inquiry, impose interim conditions on a charity, and direct a charity to take specific actions
• Expanded trustee disqualification: The grounds for automatic disqualification from trusteeship were broadened to include unspent convictions for dishonesty and terrorism offences, plus new discretionary grounds
• Improved information sharing: OSCR gained powers to share information with other regulators (the Charity Commission, HMRC, police) more freely
• Charity reorganisation: A streamlined process for charities to reorganise (change purposes, merge, or wind up) without the cost of a court application
• Notifiable events: A formal requirement for charities to report serious incidents to OSCR, similar to the system already in place for English and Welsh charities

How OSCR differs from the Charity Commission

If you have experience of the Charity Commission for England and Wales, you will notice some important differences in how OSCR operates:

Registration threshold

The Charity Commission has a 5,000 GBP income threshold below which charities are exempt from registration (though they may register voluntarily). OSCR has no income threshold. Every charity operating in Scotland must register, regardless of size. This means the Scottish Charity Register includes thousands of very small, volunteer-run organisations.

Regulatory approach

OSCR is a smaller organisation than the Charity Commission and regulates a smaller sector (approximately 25,000 charities compared to around 170,000 in England and Wales). OSCR's approach tends to be more proportionate and relationship-based, with greater emphasis on guidance and engagement before enforcement. However, the 2023 Act gave OSCR significantly stronger intervention powers.

Legal forms

Scotland has SCIOs (Scottish Charitable Incorporated Organisations) while England and Wales has CIOs (Charitable Incorporated Organisations). Both provide limited liability without dual regulation, but they are different legal forms governed by different legislation. A SCIO cannot operate as a CIO in England and vice versa.

Accounting framework

Both jurisdictions follow the Charities SORP, but the thresholds for audit, independent examination, and receipts and payments accounts differ. Scottish thresholds are set in the Charities Accounts (Scotland) Regulations 2006 (as amended), not the Charities Act 2011.

How this affects your charity

Understanding the regulatory framework matters for practical reasons:

• Compliance planning: Scottish charities have specific annual return requirements, accounting thresholds, and notifiable event duties that differ from England and Wales. Building these into your governance calendar avoids costly mistakes.
• Trustee recruitment: The expanded disqualification criteria under the 2023 Act mean you must check whether prospective trustees are eligible before appointing them. Appointing a disqualified person is an offence.
• Cross-border operations: If your charity operates in both Scotland and England or Wales, you face dual regulation. Both regulators expect compliance with their respective requirements, and you must file separate annual returns with each.
• Governance standards: OSCR's expectations for trustee conduct and charity governance are high and rising. The 2023 Act signalled that the Scottish Parliament expects robust oversight and accountability from charity trustees.

Charity regulation in Scotland is a live area of law. OSCR publishes updated guidance regularly, and the full commencement of the 2023 Act provisions will continue to change the regulatory environment over the coming years.