Several important updates to charity accounting and reporting are coming into effect in 2026. These aim to make financial reporting more proportionate, transparent, and easier to understand, especially for smaller organisations. If your charity prepares annual accounts, trustees and senior staff should familiarise themselves with these changes now.
New Charities SORP 2026
The Statement of Recommended Practice (SORP) sets the accounting and reporting framework for charities preparing accruals accounts. A newly updated SORP 2026 will apply to accounting periods starting on or after 1 January 2026.
Key points:
Three reporting tiers based on charity size will replace the previous approach:
Tier 1: Income up to £500,000
Tier 2: Income between £500,000 and £15 million
Tier 3: Income over £15 million
These tiers help tailor reporting expectations to charity capacity and public interest.
Trustees’ Annual Report requirements are refreshed, with clearer guidance on reporting:
- Financial reserves
- Future plans
- Activities and impact
- Environmental, social and governance (ESG) considerations (with signposts for transparency)
- Clarified treatment of income and leases, social investments, and provisions/contingencies are included
What this means:
Charities that prepare accruals accounts should review the new SORP modules now so you can apply the correct template and disclosures when your next reporting period begins in 2026.
See the full SORP 2026 on the Charities SORP website for detailed guidance
Higher thresholds for accounting requirements
A separate set of changes to statutory thresholds has been agreed by government (via the Department for Culture, Media and Sport) and will take effect from around 30 September / 1 October 2026. These changes aim to reduce regulatory burden for smaller charities.
Updated thresholds include:
| Requirement | Current threshold | New threshold (from late 2026) |
|---|---|---|
| Independent examination required | Over £25,000 income | Over £40,000 income |
| Independent examination by a professionally qualified examiner | Over £250,000 income | Over £500,000 income |
| Can prepare receipts and payments accounts | Under £250,000 income | Under £500,000 income |
| Statutory audit – income basis | Over £1,000,000 income | Over £1,500,000 income |
| Statutory audit – assets + income basis | Assets > £3.26m & income > £250,000 | Assets > £5m & income > £500,000 |
| Group accounts requirement | Group income £1m+ | Group income £1.5m+ |
See Gov.uk for new rules for charities preparing accruals accounts
What this means:
Smaller charities may no longer need an independent examination or can continue with simpler accounts for longer – reducing time and cost. Larger charities will see the audit threshold move upwards, which may relieve some compliance pressure. Trustees should check how these updated thresholds affect your charity’s legal reporting responsibilities and consider if your accounting approach needs updating.
What trustees should focus on
- Prepare now: Review your next reporting period and identify which SORP tier applies.
- Trustees’ Annual Report: Ensure it includes clear, accessible information on reserves, risks, future plans, and impact.
- Threshold changes: Check whether your charity crosses any of the new examination or audit thresholds; factor this into your planning and budgeting.
- Communication: Consider explaining these changes briefly in your next AGM or trustee meeting so everyone understands compliance expectations.
Where to get more detail
For complete and official information, see:
NCVO (National Council for Voluntary Organisations)
Practical guidance on charity governance, reporting and finance
Government and Charity Commission guidance on charity accounting and reporting changes
Including SORP 2026 and threshold updates
Charities SORP website
For the full SORP 2026 document and resources
