Charity accounts: accruals threshold doubles to 500,000 pounds

The three new thresholds

Source: Charity Commission for England and Wales, 16 September 2026.

The Charity Commission for England and Wales published a press release on 16 September 2026 urging all charities to check new accounting rules. The updated guidance now provides one guide for each of the three main legal structures: a trust or unincorporated association, a charitable company, and a charitable incorporated organisation. For financial years ending on or after 30 September 2026, charities in England and Wales must prepare SORP-compliant accruals accounts only if income is above 500,000 pounds, doubled from 250,000 pounds. The change means that a large group of smaller charities moves out of the accruals regime and into a simpler reporting option, provided their legal form allows it.

Two related assurance thresholds also rise. Independent examination is required for income above 40,000 pounds, up from 25,000 pounds. An audit is required for gross income above 1.5 million pounds, or gross income above 500,000 pounds with gross assets over 5 million pounds, up from 1 million pounds. The Commission stated on 31 October 2025 that more than 5,130 non-company charities in England and Wales could opt to produce receipts and payments accounts instead of accruals accounts under the new threshold. Sue Smith, Senior Trustee Guidance Manager, 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.' Amie Woods, Assistant Director of Accountancy, said: 'Charity trustees have stewardship of around 100 billion pounds of charitable money and people want to see how those funds are being spent to do good.'

SORP 2026

SORP 2026 applies to charities across the UK for financial years starting on or after 1 January 2026. It introduces new requirements for recognising and reporting certain types of income and lease arrangements following the Financial Reporting Council's update to FRS 102. The statement of recommended practice also introduces three tiers: Tier 1 for income up to 500,000 pounds, Tier 2 for income from 500,000 pounds to 15 million, and Tier 3 for income above 15 million. Only charities with income above 15 million pounds must produce a detailed statement of cash flows unless FRS 102 requires it. That relief matters for mid-sized charities that previously prepared a cash flow statement as a matter of course.

SORP 2026 refreshes the Trustees' Annual Report with guidance on reporting reserves and future plans and dedicated sections for impact and environmental, social and governance reporting. Social investment accounting is aligned with the Charities Act 2011 definition, and provisions and contingencies requirements are simplified. The combined effect is a reporting framework that scales with income and legal form rather than applying a single set of expectations to every charity. Trustees preparing accounts for the first time under the new SORP should map each disclosure requirement to the tier that applies to their charity and confirm which income and lease arrangements fall within the revised recognition rules.

Who is affected and how

The legal structure of a charity determines which guide applies and whether the new thresholds can be used. Trusts and unincorporated associations, charitable companies and CIOs each now have a single guide. However, company law requires all charitable companies to prepare accruals accounts regardless of the threshold, so a charitable company with income below 500,000 pounds cannot switch to receipts and payments accounts even though the Charity Commission threshold would otherwise permit it. CIOs and non-company charities have more flexibility, which is why the Commission identified more than 5,130 non-company charities that could opt for receipts and payments accounts. Trustees should confirm the charity's legal form before assuming the new threshold applies.

Scotland and Northern Ireland keep their existing position: accruals accounts are required where gross income is 250,000 pounds or more. A charity operating across borders therefore faces different requirements depending on where it is registered and which regulator's rules apply. The Commission's smart answer tool, 'Prepare a charity's annual accounts', will be updated with the new thresholds at the end of September 2026. Guidance for previous financial years remains on GOV.UK, so trustees preparing accounts for an earlier year should continue to use the guidance that applied at that time rather than the updated pages.

What has not changed

All charities must prepare accounts, and registered charities must also produce a trustees' annual report. Accounts and the annual return are due within 10 months of the financial year end, and accounts must be available to the public on request. Those obligations apply regardless of the accounting threshold, the legal structure or the tier that applies under SORP 2026. A charity that moves to receipts and payments accounts still has to file on time and still has to respond to public requests for its accounts. The filing deadline is the fixed point around which the rest of the reporting timetable should be planned.

The scale of the sector explains the continued scrutiny. Charities expended 100.86 billion pounds in 2024 according to annual return analysis, and the Commission's 2026 public trust research ranks visibility of how money is raised and spent third among drivers of trust. Amie Woods, Assistant Director of Accountancy, said: 'Charity trustees have stewardship of around 100 billion pounds of charitable money and people want to see how those funds are being spent to do good.' The threshold changes reduce the reporting burden for smaller charities while leaving the underlying duty to account for charitable funds intact. Trustees and the accountants who serve them should check the charity's income, legal form and year end against the new thresholds before deciding which accounts to prepare.

Source: Charity Commission press release, 16 September 2026.

Related coverage on Kael Tripton: Charity Energy Bills: The VAT Relief Many Charities Never Claim, Before You Donate: How to Check a Charity Is Genuine and Claim Gift Aid, What Is gift aid? UK Meaning Explained, What Happens If You Gift Aid But Dont Pay Tax, Outbound Desk for accountants and bookkeepers.

Frequently asked questions

What is the new accruals accounts threshold for charities in England and Wales?

For financial years ending on or after 30 September 2026, charities in England and Wales must prepare SORP-compliant accruals accounts only if income is above 500,000 pounds, doubled from 250,000 pounds.

When does independent examination apply?

Independent examination is required for income above 40,000 pounds, up from 25,000 pounds.

When is an audit required?

An audit is required for gross income above 1.5 million pounds, or gross income above 500,000 pounds with gross assets over 5 million pounds, up from 1 million pounds.

Which charities can switch to receipts and payments accounts?

More than 5,130 non-company charities in England and Wales could opt to produce receipts and payments accounts instead of accruals accounts under the new threshold. Charitable companies must still prepare accruals accounts under company law.

When does SORP 2026 apply?

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