Navigating the new Charity SORP and new audit thresholds in 2026

In 2026, charities will need to comply with a new Charity SORP (Statement of Recommended Practice) and revised audit and independent examination thresholds. The updated Charity SORP applies to accounting periods starting on or after 1 January 2026, while new audit and independent examination thresholds come into effect on 30 September 2026 and apply to accounting years that end on or after 30 September 2026. 

Read on to find out how these changes will affect the way accounts are prepared and reviewed, and how professional auditing services can help to ensure your financial teams and trustees are ready for the changes. 

What is the Charity SORP? Current charity reporting and audit requirements

Under the current framework, most charities prepare their accounts in line with the existing Charity SORP. The SORP guides how charity accounts should be structured, what information must be disclosed, and how income, expenditure, assets, and liabilities should be reported. This ensures accounts are clear and transparent for funders, regulators, and the public.

Whether a charity requires a statutory audit or an independent examination depends on its income and asset levels. Larger charities are generally subject to audit, while smaller charities may opt for an independent examination. 

The responsibility lies with the trustees to ensure that the correct level of external scrutiny is applied. However, this regime presents several challenges, including: 

• Interpreting complex disclosure requirements
• Understanding when audit thresholds are triggered
• Balancing compliance with proportionality

For growing charities approaching audit thresholds, these challenges can be especially difficult to navigate, so there is audit support available. 

What’s changing? – Charity SORP and new audit thresholds in 2026

From 2026, charities will need to adapt to both an updated SORP and revised audit thresholds. While the changes are designed to modernise charity reporting, they will require careful planning to implement smoothly and avoid compliance risks.

The new Charity SORP (Effective 1 January 2026)

The Charity SORP 2026 updates the framework charities use to prepare their accounts. The changes are designed to improve clarity and alignment with wider UK accounting standards. 

What are the key differences from the previous SORP? 

• Updated presentation of financial statements: Financial statements will be presented in a clearer and more consistent format, making them easier for trustees, funders, and the public to understand and compare across charities. There will be a three-tier reporting framework, based on gross income, and each tier introduces progressively more detailed disclosure and presentation requirements.
• Enhanced narrative and financial disclosures: Charities will need to provide more informative explanations alongside the figures, helping readers better understand financial performance, financial position, and key judgments made during the year.
• Refined guidance on income recognition, lease accounting, reserves, and fund reporting: The new SORP clarifies how and when income should be recognised along with incorporating significant updates from FRS 102 in respect of lease accounting. It also strengthens guidance on reserve policies and fund reporting to make sure that both restricted and unrestricted funds are accurately reported.

Who must apply for the new SORP?

All charities preparing accruals accounts under UK accounting standards must apply the new SORP. 

New audit threshold changes, (Effective 30 September 2026)

From 30 September 2026, the income and asset thresholds that determine whether a charity requires an audit or an independent examination will also change. These reforms are intended to ensure external scrutiny is proportionate to charity size and risk.

How will the changes affect charities of different sizes?

• Smaller charities may avoid an audit for longer
• Medium-sized charities may see a change in scrutiny requirements
• Larger charities will remain subject to an audit

For example, a growing charity may newly qualify for independent examination or cross a revised threshold sooner than expected. 

How to navigate the 2026 audit threshold changes

Successfully managing the changes requires early action, a clear understanding, and structured planning. 

Understand how the audit threshold changes apply to you

Charities should assess both when the new SORP applies and whether revised thresholds affect their reporting requirements.

Key questions to ask now include:

• When does our next accounting period start?
• Will our income or assets exceed the new thresholds?
• Do we expect growth that could change our audit requirements?
• Are trustees clear on their responsibilities?

Plan now for a smooth transition

A clear transition plan will reduce disruption and risk. Charities should take steps to: 

• Map out timelines
• Update accounting policies
• Ensure systems can capture the information required under the new SORP

Managing overlap between old and new rules will be particularly important throughout 2026.

Governance and trustee responsibilities

Trustees remain ultimately responsible for compliance. Under the new regime, they must ensure appropriate challenge and oversight of financial reporting, understand the basis for audit or independent examination decisions, and document those decisions clearly. 

Avoiding common pitfalls

Leaving preparation too late is one of the biggest risks. Without early planning, charities may misunderstand effective dates, misapply thresholds, or miss critical advice – leading to compliance issues and potential fines or legal penalties. Start early and maintain clear communication with advisers to avoid these problems. 

How Rayner Essex can support you through the new Charity SORP changes

At Rayner Essex, we work closely with charities to help them understand and implement the Charity SORP 2026 in a practical way. We support charities through transition planning, policy updates, and the preparation of compliant, high-quality financial statements.

Our team provides tailored, accounting and audit and assurance services aligned with the revised thresholds, helping charities determine the most appropriate reporting route as their circumstances change. We work closely with trustees and finance teams to ensure they fully understand their responsibilities and feel confident navigating the new requirements.

If you would like support preparing for the Charity SORP 2026 or understanding how the new audit thresholds affect your charity, get in touch with our charity experts Darren Hill, or Natalie Saunders at Rayner Essex today. 

Natalie Saunders

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Darren Hill

Partner

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