From 30 September 2026, a number of financial thresholds in charity law in England and Wales are set to increase. The changes are intended to make reporting and scrutiny requirements more proportionate, particularly for small and mid-sized charities that may have been pushed into higher compliance requirements by inflation rather than real growth.
For trustees, finance teams and advisers, the headline message is simple: some charities may be able to prepare simpler accounts, some may no longer be legally required to obtain an independent examination, and some may fall outside the statutory audit regime. However, the changes do not remove trustees’ wider duties to keep proper accounting records, maintain appropriate oversight, and ensure the charity’s accounts are transparent and fit for purpose.
What is changing?
The main threshold changes expected from 30 September 2026 are:
| Area affected | Current threshold | New threshold from 30 September 2026 | What this means |
| Independent examination | Income above £25,000 | Income above £40,000 | Some charities with income between £25,000 and £40,000 may no longer be legally required to obtain an independent examination. |
| Qualified independent examiner | Income above £250,000 | Income above £500,000 | The point at which the independent examiner must be professionally qualified will increase. |
| Receipts and payments accounts | Income below £250,000 | Income below £500,000 | Eligible non-company charities may be able to use a simpler receipts and payments basis for accounts. |
| Statutory audit | Gross income above £1 million | Gross income above £1.5 million | Some charities may fall outside the statutory audit requirement, subject to other requirements. |
| Asset-based audit test | Assets above £3.26 million and income above £250,000 | Assets above £5 million and income above £500,000 | The audit test based on assets and income will apply at higher limits. |
| Group accounts | Aggregate income above £1 million | Aggregate income above £1.5 million | The threshold for preparing and auditing group accounts will increase. |
When do the changes apply?
The changes are expected to apply to accounting years ending on or after 30 September 2026. This means the impact will depend on the charity’s financial year end. For example, a charity with a 31 December 2026 year end would assess its accounts against the new thresholds, while an earlier year end may still fall under the current rules.
Charities should not assume that the new thresholds can be applied early. The timing is date-driven, so trustees should check which accounting period is affected and plan accordingly.
What does this mean in practice?
For smaller charities, the rise in the independent examination threshold may reduce compliance costs where income is between £25,000 and £40,000. These charities may no longer be legally required to obtain an independent examination, although trustees can still choose to do so if it provides assurance to funders, donors or the board.
For non-company charities with income below £500,000, the increased receipts and payments threshold could offer a simpler accounting route. This may reduce complexity, but it is not always the right answer. Trustees should consider the charity’s activities, funding arrangements, reserves, assets, restricted funds and stakeholder expectations before changing accounting basis.
For larger charities, the increased audit thresholds may mean that some organisations are no longer required by law to have a statutory audit. However, an audit may still be required by the charity’s governing document, funders, lenders, regulators or trustees themselves. The decision should be based on risk, accountability and the needs of the charity, not simply the minimum legal requirement.
How does this link to SORP 2026?
The threshold changes sit alongside wider changes to charity accounting and reporting under SORP 2026, which applies to reporting periods beginning on or after 1 January 2026 for charities preparing accruals accounts. SORP 2026 introduces a three-tier reporting structure based on income, with Tier 1 covering charities up to £500,000, Tier 2 covering charities between £500,000 and £15 million, and Tier 3 covering charities over £15 million.
This means trustees should look at the threshold changes and SORP 2026 together. A charity may have new flexibility over the type of accounts it prepares, but it may also face updated reporting expectations where accruals accounts continue to be required or chosen.
What should trustees do now?
- Check your year end: confirm which accounting period will first be affected by the new thresholds.
- Review income and assets: assess whether the charity is likely to fall above or below the new limits.
- Check the governing document: your constitution, trust deed or articles may still require an audit or particular accounting approach.
- Speak to funders and stakeholders: grant agreements, loan covenants or funder expectations may still require external scrutiny.
- Consider whether simpler accounts are appropriate: receipts and payments accounts may be suitable for some non-company charities, but not all.
- Update your timetable: plan ahead for examiner or auditor appointments, board approvals and filing deadlines.
- Document the decision: trustees should record why they have chosen a particular accounting and scrutiny route.
What has not changed?
The changes do not remove trustees’ legal responsibilities. Charities must still keep proper accounting records, prepare annual accounts, submit required filings, and ensure that financial reporting gives a clear and accurate picture of the charity’s activities and position.
Charities with income over £10,000 are still required to submit an annual return, and the requirement to file accounts with the Charity Commission where income exceeds £25,000 remains separate from the new independent examination threshold.
Key takeaway
The new charity threshold changes should be welcome news for many organisations, but they should not be treated as a purely administrative saving. Trustees should use the run-up to 30 September 2026 to review their reporting requirements, consider whether any changes are appropriate, and make sure the charity’s financial reporting remains proportionate, transparent and trusted.
Need help preparing for the changes? Now is a good time to review your charity’s year end, income levels, assets, governing document and external reporting requirements so you can plan ahead with confidence.
