The Charity Commission for England and Wales is urging all charity trustees and professional advisers to review its updated guidance on accounting rules. These changes apply to financial years starting on or after 1 January 2026.
For charities in England and Wales, new income thresholds for preparing accruals accounts and having accounts examined or audited will apply for financial years ending on or after 30 September 2026. The threshold for preparing accruals accounts has doubled to above £500,000, while the threshold for independent examination has risen to above £40,000. An obligatory audit is now required for gross income above £1.5 million, or gross income above £500,000 with gross assets over £5 million.
The guidance has also been updated to reflect changes to the Charities Statement of Recommended Practice (SORP), which includes new requirements for recognising certain income types and lease arrangements. Sue Smith, Charity Commission Senior Trustee Guidance Manager, stated that charities may need to prepare their accounts differently this year due to these changes.
The regulator's research indicates that financial transparency is crucial for public trust in the charity sector, which expended approximately £100 billion in 2024. Amie Woods, Charity Commission Assistant Director of Accountancy, highlighted that accounts and annual returns provide essential information on how charitable funds are spent.