If your charity prepares accruals accounts, you must follow the Charities SORP (Statement of Recommended Practice). Accrual accounts give a clearer picture of your financial viability, for example they show who owes you money and who you owe money to. If you’d like more information on this and to check what sort of accounts you should be submitting, check here.
The Charities SORP has just been updated following a consultation with the sector. The new regulations apply to reporting periods starting on or after 1 January 2026.
Overall, the changes aim to bring SORP in line with recent legislation, simplify guidance and recognise the needs of smaller charities. The full detail is available on the SORP website and is mostly aimed at finance professionals, but this resource summarises some of the general points that trustees and senior staff will need to take on board.
For most Voscur members the changes will be small and will often be handled by your accountant. However, we recommend that you;
- Check what “tier” you will be in for the next reporting year
- Start collecting any additional information on future plans, impact and the role of volunteers that you’ll need to add to your Annual Report.
How do the changes affect us?
There are now three new tiers to ensure reporting is more proportionate to your charity’s size. As you read the detailed guidance, you’ll see references to items applying to one or more tiers only.
- Tier 1: Income up to £500,000
- Tier 2: Income between £500,000 and £15 million
- Tier 3: Income over £15 million
Below is a summary of how each tier needs to change their Trustees Annual Report.
Tier 1
If your charity’s income is up to £500k, you’ll need to:
- Explain how volunteers contribute to the activities of the charity.
- Give increased detail on your reserves policy, linking it to the balance sheet and explaining any discrepancies including what actions are being taken to fix any issues such as not having enough in reserve.
- You may already summarise future plans, but this is now a required element.
- Unlike larger charities, impact reporting isn’t required but you do need to summarise the main achievements of the year. Of course, reporting on your impact voluntarily is a very good idea to enhance your report’s usefulness for fundraising and stakeholder communication.
Tier 2
If your charity’s income is between £500k and £15 million, in addition to the Tier 1 requirements above, you’ll need to :
- Explain short and long term aims and objectives in detail, particularly to explain how the longer-term goals will be achieved. There are specific questions in the Charities SORP in paragraph 1.24 that must be answered here. You’ll also need to explain how the achievements in the year delivered against your aims and objectives plus the impact of the charity’s activities on the wider world – more detail on this below.
- Include environmental and cyber issues in your risk reporting.
- Explain your charity’s main income and how it’s spent in your financial review.
- If you have investments you’ll need to summarise the social, environmental or ethical considerations that influence your investment policy,
- Report on your impact to show how you are meeting your clearly stated aims and objectives. Even charities that are currently reporting their impact will probably need to reassess and revise to make sure they are answering the specific questions required. You may already report on your outputs – the types and numbers of activities and actions – but you will now need to show what positive differences these have made. This should include what changed, for whom, and why that change matters. You should also comment on significant positive and negative factors, both internal and external, that affected the achievement of your objectives.
Tier 3
The very largest charities (income over £15 million) must now (in addition to the Tier 1 and Tier 2 requirements) report on environmental, governance and social matters to summarise how the charity is dealing with these areas.
It may be useful for trustees to be aware of additional requirements to report on income and lease arrangements and Social Investments (loans tied to achieving social impacts). You may see these in the accounts when you review them at year-end.
If you aren’t sure how to handle these changes useful examples are available on the SORP website to help you scope out what you need to do, if anything. A full summary of the changes, including details of new accounting requirements, is available here
Note: Future changes to accounts and examination requirements
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 |
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 £1,000,000 | Income over £1,500,000 |
Group accounts must be prepared and audited | Aggregate income of group £1,000,000 | Aggregate income of group £1,500,000 |
Disclaimer
We make every effort to ensure that our information is correct at the time of publication.
This is only intended as a brief summary of relevant issues and information. Legal advice should be sought where appropriate. The inclusion of other organisations in this information does not imply any endorsement of independent bodies, they are just for signposting purposes.
Voscur is unable to accept liability for any loss or damage or inconvenience arising as a consequence of the use of this information.
