Overhaul of Charity SORP accounting rules effective 1 October
Sara White, Editor, Business & Accountancy Daily
New accounting rules under Charity SORP 2026 introduce higher thresholds for accruals accounts, and new lease and income requirements, while regulator plans review to further simplify
The Charity Commission is reminding trustees, accountants and auditors in England and Wales that the accounting requirements for charities are changing for financial years starting on or after 1 January 2026.
The regulator has refreshed the guidance for the Charity SORP 2026 to reflect higher thresholds, and new income and lease reporting requirements. It strongly advises trustees, accountants and auditors to ensure they are up to speed with the changes, which are significant due to wider accounting changes to UK GAAP filtering across to charities.
This year there are three guides depending on the charities size by income, which is part of efforts to simplify the guidance.
The threshold for some charities to produce accrual accounts has doubled from £250,000 to £500,000. This means an estimated 5,100 non-company charities in England and Wales can now opt to produce receipts and payments accounts instead.
‘As charities have different accounting requirements based on their legal structure, there is now one guide for each of the three main structure types: a trust or an unincorporated association; a charitable company; a charitable incorporated organisation (CIO),’ the Charity Commission confirmed.
For financial years ending on or after 30 September 2026 the income thresholds have increased as follows:
- above £500,000 for preparing accruals accounts, up from £250,000;
- above £40,000 for having accounts checked by an independent examiner, increased from £25,000;
- either above £1.5m gross income or gross income above £500,000 and gross assets over £5m for an obligatory audit, increased from £1m.
The guidance has also been updated to reflect two key changes, firstly the revised Charity SORP 2026, Charities Statement of Recommended Practice: Accounting and Reporting, and an increase in income thresholds for filing accounts and requirement to have accounts examined or audited.
The new version of the SORP applies to charities across the UK for financial years starting on or after 1 January 2026. The major accounting change includes new lease and revenue recognition reporting requirements for recognising and reporting certain types of income and lease arrangements, and new expectations for increased transparency from big income charities.
Charity Commission senior trustee guidance manager, Sue Smith, said: ‘You may need to prepare your accounts differently this year as there are some changes to the accounting requirements for charities in England and Wales. Our refreshed guidance sets out clearly what to do, step by step.
‘We’ve also listened to feedback and made our guidance easier for trustees – and their professional advisers – to use and find the relevant information for their charity.
‘Guidance for previous financial years remains available on gov.uk for the time-being, as charities may need to refer to this in compiling their accounts.’
Acknowledging the complexity of the current rules, the Commission indicated it plans to review the accounting requirements.
Charity Commission assistant director of accountancy, Amie Woods said: ‘Charity trustees have stewardship of around £100bn of charitable money and people want to see how those funds are being spent to do good.
‘Accounts and annual returns provide that essential information and by far the majority of charities submit these to the Commission on time.
‘However, the rules for compiling accounts are complex so in the longer term we want to explore if there are other ways to make it more straightforward for charities. It’s not just about cutting red tape, it’s about getting the right balance between reducing the burden on charities whilst maintaining accountability and protecting public trust.’
