Charities in England and Wales need to review their accounting and reporting requirements for 2026. The Charity Commission has updated its guidance to reflect the introduction of SORP 2026 and changes to charity accounting thresholds.
SORP 2026 applies to financial years beginning on or after 1 January 2026. In addition, new accounting and examination thresholds apply to financial years ending on or after 30 September 2026.
The updated guidance is structured around three main charity types: trusts and unincorporated associations, charitable companies, and charitable incorporated organisations (CIOs).
What Is Changing for Charities in 2026?
The 2026 changes cover two important areas:
- Updates under SORP 2026
- New income and asset thresholds for accounts, independent examinations and audits
These changes are intended to make accounting requirements more proportionate to the size of charities while introducing updated reporting requirements.
SORP 2026 Applies From 1 January 2026
SORP 2026 applies to charities across the UK for financial years starting on or after 1 January 2026.
The updated framework includes new requirements relating to certain types of income and lease arrangements. It also introduces three reporting tiers for charities preparing accruals accounts:
- Tier 1: Income up to £500,000
- Tier 2: Income between £500,000 and £15 million
- Tier 3: Income above £15 million
SORP 2026 also includes updated guidance covering areas such as reserves, future plans, impact reporting, environmental and social matters, social investments, provisions and contingencies.
What Are the New Charity Accounting Thresholds?
For charities in England and Wales, the new thresholds apply to financial years ending on or after 30 September 2026.
Accruals Accounts Threshold
The income threshold for preparing accruals accounts has increased from £250,000 to above £500,000.
For eligible non-company charities, receipts and payments accounts can generally be prepared where gross income is £500,000 or less, unless the governing document requires accruals accounts or the charity chooses to prepare them.
Independent Examination Threshold
The threshold for requiring an independent examination has increased from £25,000 to above £40,000.
For financial years ending on or after 30 September 2026:
- Income of £40,000 or less: no statutory requirement for an independent examination or audit, subject to the governing document or funding requirements.
- Income above £40,000 and up to £1.5 million: an independent examination or audit may generally be used, unless an audit is otherwise required.
- Where income is above £500,000 and up to £1.5 million, an independent examination must be carried out by a professionally qualified examiner.
When Is a Charity Audit Required?
The audit threshold has also increased.
For financial years ending on or after 30 September 2026, an audit is required where:
- Gross income is more than £1.5 million, or
- Gross income is more than £500,000 and gross assets are more than £5 million.
This replaces the previous thresholds of £1 million, or £250,000 income combined with assets above £3.26 million.
Who Does the New Guidance Apply To?
The Charity Commission has separate guidance for the three main charity structures.
Trusts and Unincorporated Associations
Trusts and unincorporated associations should follow the guidance applicable to their structure. For financial years ending on or after 30 September 2026, eligible organisations with gross income of £500,000 or less can generally prepare receipts and payments accounts.
Charitable Companies
Charitable companies must consider both charity law and applicable company law requirements. Their accounts must comply with SORP 2026 where applicable, while some companies may also have audit obligations under the Companies Act 2006.
Charitable Incorporated Organisations
CIOs can generally prepare receipts and payments accounts where gross income is £500,000 or less for financial years ending on or after 30 September 2026, unless their governing document requires accruals accounts or they choose to prepare them.
What Should Charity Trustees Check?
Trustees should review their charity’s:
- Legal structure
- Financial year-end date
- Gross income
- Gross assets
- Accounting basis
- Independent examination or audit requirements
- SORP 2026 reporting requirements
- Trustees’ annual report
- Annual filing obligations
All charities must prepare accounts, while registered charities must also prepare a trustees’ annual report. These documents must be made available to the public on request.
Note
The new thresholds do not apply to every accounting period in 2026. The threshold changes apply to financial years ending on or after 30 September 2026, while SORP 2026 applies to financial years starting on or after 1 January 2026. Charities should therefore check their specific accounting period before determining which rules apply.
Charities operating across different parts of the UK should also check the accounting requirements applicable in Scotland or Northern Ireland.
Conclusion
The 2026 charity accounting changes introduce SORP 2026 alongside higher income and asset thresholds for charities in England and Wales.
From financial years ending on or after 30 September 2026, the key thresholds include £500,000 for accruals accounts, £40,000 for independent examination and £1.5 million for mandatory audit, subject to the applicable conditions.
Charity trustees and advisers should review the updated Charity Commission guidance and assess their accounting and reporting requirements for the relevant financial year.
