Charity financial thresholds are changing: what does it mean for your charity? 

From 30 September 2026, a number of financial thresholds for charities in England and Wales are increasing, changing when charities need an independent examination or statutory audit and, for some organisations, the type of accounts they can prepare. 

The changes are intended to create a more proportionate reporting framework, reflecting increases in charity income and asset values over time. For many charities, this could mean fewer statutory reporting requirements, greater flexibility and potential reductions in year-end reporting costs, although some organisations may still require an audit under their governing document or funding arrangements. 

So, what exactly is changing and what should trustees and charity finance teams be considering? 

Charity financial thresholds: what is changing?

Here is a snapshot of the current thresholds alongside those taking effect from September 2026: 

The changes apply to financial years ending on or after 30 September 2026, so charities with year ends falling on or after this date should consider whether they will move into a different reporting category.

Could your charity move from an audit to an independent examination? 

For some charities, the new thresholds could mean they are no longer required to have a statutory audit and may instead be eligible for an independent examination. This could result in a less complex year-end process, with potential savings in both time and cost. 

The changes may also benefit charities that hold significant property or investments but have a comparatively lower annual income. 

However, falling below the new thresholds does not automatically mean an audit is no longer required. Your governing document, funder requirements or other circumstances may still require one, so it is important to consider your charity’s individual position before making any changes. 

Greater flexibility over how accounts are prepared 

Due to the income limit for using receipts and payments accounting increasing from £250,000 to £500,000, eligible non-company charities will also have greater flexibility when deciding how to prepare their accounts.  

This is a simpler approach that records money when it is received or paid, rather than following full accruals accounting requirements. 

This could make the accounting process more straightforward for some charities, but switching accounting methods is not necessarily the right choice for every organisation. Trustees will need to consider what provides the most useful financial information for their charity, alongside any requirements within their governing document. 
 
 

SORP 2026 also needs to be on your radar 

The threshold changes come alongside another significant development for the sector: Charities SORP 2026. 

For charities preparing accruals-based accounts, the new Charities SORP 2026 applies to accounting periods beginning on or after 1 January 2026 and introduces a new three-tier reporting framework based on annual income:

There are also changes across areas including the Trustees’ Annual Report, leases and income recognition. 

With both sets of changes arriving in 2026, charities should look at their financial reporting requirements as a whole. In some cases, the new financial thresholds may simplify the level of external scrutiny required, while SORP 2026 may introduce new considerations elsewhere in the accounts. 

What should charities be doing now? 

Although the changes should reduce the reporting burden for many charities, it is important not to assume that dropping below a new threshold automatically means changing your current approach. 

Trustees and finance teams should consider: 

Reviewing this now can help avoid surprises at year end and give trustees time to understand the choices available to them.