New accounting rules for charities in the UK will vary depending on their income, according to the new Charities Statement of Recommended Practice (SORP) published today.
For accounting periods beginning after 1 January 2026, only charities with annual turnovers of more than £15m will be required to produce a detailed statement of cashflows under the new rules.
Following a consultation earlier this year, there will be less stringent requirements for charities with incomes over £500,000 and the lightest touch rules for smaller voluntary organisations.
New requirements for how charities should report on certain types of income and lease arrangements will also be introduced as part of the new SORP, which has been updated to incorporate recent changes to the Financial Reporting Council’s FRS 102 standard.
The new SORP includes refreshed annual report requirements for trustees, with further guidance added on how to report financial reserves and plans about the future.
It has added dedicated sections for areas of public and donor interest including impact reporting, environmental, social and governance issues with associated guidance on reporting.
There are also updates to how charities should account for social investments, designed to align with the definition of such holdings in the Charities Act 2011.
The new SORP also aims to make requirements for reporting provisions and contingencies easier to understand.
Requirements for small charities
Alongside the SORP revisions, led by the three charity regulators across the UK, the government’s Department for Culture, Media and Sport (DCMS) has also announced changes to charity accounting thresholds.
Following its own separate consultation, DCMS has announced that the threshold for some charities to produce accrual accounts will double from £250,000 to £500,000, to match the lowest SORP tier.
It is estimated that this change will mean more than 5,000 non-company charities in England and Wales now could opt to produce receipts and payments accounts instead.
The Charity Commission for England and Wales plans to work with DCMS to consider further changes including the potential development of a standard form for receipts and payments accounts and the digitisation of charity accounts filing.
Commission chief executive David Holdsworth said he hoped the SORP changes would enable charities “to communicate both their financial position and the impact of their work more effectively”.
“We welcome the changes introduced by DCMS to ease administrative burdens for charities in England and Wales,” he said.
“We’re also beginning work with them to explore further opportunities to simplify the regulatory landscape.
“As we move forward, we look forward to continuing conversations with charities across England and Wales, and we’re grateful to everyone who contributed to the consultation on the updated SORP.”
Alex Wright, head of regulator at Scottish charity regulator OSCR, said: “The updated requirements place greater emphasis on reporting the impact charities have on society, as well as enhanced reporting around environmental, social, and governance issues.
“All of this will improve transparency of registered charities and increase public trust in individual organisations and the wider charity sector.”
Frances McCandless, CEO of the Charity Commission for Northern Ireland, said: “The updated SORP is a welcome move towards clearer, more proportionate requirements that reflects the size and nature of each charity.
“It gives organisations the tools to tell their story well, show their impact, and maintain public trust.”
Concern over middle tier thresholds
Richard Sagar, head of policy at the Charity Finance Group (CFG), expressed concern about the breadth of the threshold for the middle tier of SORP requirements (for charities with incomes from £500,000 to £15m).
“All charities following the SORP will be impacted by the changes, and charities at the bottom end of tier two will be particularly affected because of the scale of the changes for them,” he said.
“We also understand that organisations will not have long to prepare before implementation
“We recognise that the SORP-making body has committed to ongoing dialogue around the tiering levels, and we will continue to advocate for the tiers to be adjusted in line with the audit thresholds.
“Additionally, we will also be open to working with the SORP-making body to help improve the development process in future years.”
The SORP-making body recognised there was some uncertainty over the thresholds in its announcement and said it would consider the tiers through further work during 2026-27.
