Changes to charity accounting and reporting
- Xaviers
- May 13
- 2 min read
Changes to the Charities SORP: New rules for charities preparing accruals accounts
If your charity prepares accruals accounts you must follow the Charities SORP (Statement of Recommended Practice). The Charities SORP has recently been updated, and SORP 2026 will apply to reporting periods starting on or after 1 January 2026.
Key changes include:
· Income and lease arrangements – new accounting rules with practical examples to help charities
· Three new tiers to ensure reporting is more proportionate to the charity’s size:
· Tier 1: Income up to £500,000
· Tier 2: Income between £500,000 and £15 million
· Tier 3: Income over £15 million
· Trustees’ Annual Reports requirements have been refreshed with additional guidance on how to report financial reserves and plans about the future. There are also dedicated sections and guidance on areas that are of particular interest to the public and donors, including impact reporting, environmental, social and governance issues
· Social investments – simplified accounting and reporting requirements
· Provisions and contingencies – easier to understand reporting requirements
For more details of the changes and to see the full SORP 2026 visit the Charity SORP website
Changes to accounts and examination requirements
Following a public consultation the Department for Culture Media and Sport (DCMS) has announced changes to accounting thresholds. These changes aim to reduce costs and administrative effort for smaller charities.
These changes are expected to come into effect on 30 September 2026 and apply to accounting years that end on or after 30 September 2026.
Requirement | Current threshold | New threshold (from 30 September 2026) |
Accounts must be independently examined | Income over £25,000 | Income over £40,000 |
Examination must be by a professionally qualified Independent Examiner | Income over £250,000 | Income over £500,000 |
Non-company charities can choose to produce receipts and payments accounts | Income below £250,000 | Income below £500,000 |
Accounts must be audited | Income over £1,000,000Assets over £3,260,000 | Income over £1,500,000Assets over £5,000,000 |
Group accounts must be prepared and audited | Aggregate income of group £1,000,000 | Aggregate income of group £1,500,000 |
If you require any further information, please get in touch with Xaviers Accountants Limited
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