The audit threshold for charities in England and Wales will rise by 50% to £1.5m, the Department for Culture, Media and Sport (DCMS) has confirmed.
Following a consultation earlier this year, DCMS announced increases to several financial reporting thresholds today, which it estimates will collectively lead to annual savings of £47m per year for the sector.
Most increases, including the audit threshold rise, were proposed by DCMS at the start of the consultation and are designed to be roughly in line with inflation.
However, after reflecting on consultation responses, DCMS will also increase independent examination requirements from £25,000 to £40,000, “in order to reduce burdens on the smallest charities”.
The government intends to introduce the new thresholds on 1 October 2026.
Further review with regulator
DCMS’s consultation response was published at the same time as the updated Charities Statement of Recommended Practice (SORP) revisions, led by the three charity regulators across the UK.
In its announcement, DCMS said that the threshold for some charities to produce accrual accounts will double from £250,000 to £500,000, an above-inflation increase, to match the top of the lowest SORP tier.
DCMS has also doubled the threshold over which certain qualification requirements to be an independent examiner apply to £500,000, after some respondents suggested it should match the new SORP tier.
The department has committed to working with the Charity Commission to develop a standardised form and content for receipts and payments accounts, and on the digitalisation of charity accounts.
DCMS has also committed to reviewing the sufficiency of guidance on independent examination, alongside the Charity Commission.
The two organisations also plan to consider further deregulatory opportunities and ways to support smaller charities, reflecting further on the suggestions raised as part of consultation responses.
Richard Sagar, head of policy at the Charity Finance Group (CFG), welcomed the increase in the audit and independent examination thresholds.
“CFG has been calling for this for more than two years, recognising that many of the previous thresholds no longer reflected the operational realities that charitable organisations faced,” he said.
“These increases will reduce regulatory burden, saving a number of charities time and money, while also ensuring that public trust in charities is maintained.”
