New charity accounting rules for 2026: what trustees need to know

The Charity Commission is urging charity trustees to check whether changes to accounting and reporting requirements affect their organisation.

With SORP 2026 now in effect and new financial thresholds applying to charities in England and Wales for financial years ending on or after 30 September 2026, trustees and finance teams should make sure they understand which requirements apply to them.

What is changing for charities?

There are two important areas of change.

The first is the introduction of the Charities Statement of Recommended Practice 2026 (SORP 2026), which applies to financial years beginning on or after 1 January 2026.

The second is a change to the financial thresholds that determine when charities in England and Wales need to prepare accruals accounts and have their accounts independently examined or audited.

What are the new charity accounting thresholds?

For financial years ending on or after 30 September 2026, the thresholds in England and Wales have increased.

The key changes are:

• Accruals accounts: the income threshold above which charities must prepare accruals accounts increases from £250,000 to £500,000.
• Independent examination: the income threshold above which accounts require independent examination increases from £25,000 to £40,000.
• Audit: an audit is required where gross annual income exceeds £1.5 million, increased from £1 million. An audit is also required where gross income exceeds £500,000 and gross assets exceed £5 million.

SORP 2026 brings wider changes

The new thresholds are only part of the picture.

SORP 2026 applies across the UK to relevant charities for financial years beginning on or after 1 January 2026.

As we have previously highlighted, the new SORP brings changes in areas including income recognition and lease accounting, as well as increased transparency requirements for larger charities.

This means charities need to consider not only whether the thresholds affecting their accounts have changed, but also whether their accounting policies, systems and financial reporting processes are ready for SORP 2026.

What should trustees do now?

Trustees and charity finance teams should establish which requirements apply to their organisation based on its legal structure, financial year and financial position.

This is a good opportunity to:

• confirm the charity's legal structure and applicable reporting requirements;
• check whether the new accounting, independent examination or audit thresholds affect the organisation;
• assess the impact of SORP 2026 on the charity's financial statements;
• review accounting for income and leases;
• make sure accounting systems and processes can provide the information required; and
• ensure trustees understand any changes to the charity's reporting obligations.

It is particularly important to consider the relevant dates carefully. SORP 2026 applies to financial years starting on or after 1 January 2026, whereas the revised thresholds for charities in England and Wales apply to financial years ending on or after 30 September 2026.

Why getting charity reporting right matters

Good financial reporting isn't simply a compliance exercise.

Clear and accurate accounts help trustees demonstrate how funds have been managed and provide donors, funders and other stakeholders with greater transparency over a charity's financial position and activities.

The Charity Commission has highlighted the relationship between financial transparency and public confidence in the sector, making effective reporting an important part of good charity governance.

How Lubbock Fine can help

The changes provide a useful opportunity for charities to review their accounting and reporting arrangements and establish whether their existing processes remain appropriate.

Lubbock Fine's specialist Charity and Not-for-profit team supports organisations with charity accounts, financial reporting, independent examinations, audits, governance and the practical implementation of SORP requirements.

If you're unsure how the new thresholds or SORP 2026 affect your charity, speak to our expert and partner Hazra Patel who can help you understand the requirements that apply to your organisation and prepare for your next reporting period.

Further guidance: Read the Charity Commission's updated guidance on charity accounts, financial reporting and tax on GOV.UK.