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The Charities SORP (Statement of Recommended Practice) is being revised, with the final version expected to be published within the next few weeks and taking effect for accounting periods starting on or after 1 January 2026.
While that may still feel a little way off, the changes are substantial, with the aim of improving transparency, consistency, and public trust across the sector – so planning ahead is essential.
It’s vital that both trustees and finance teams of charities understand what’s changing and how it affects reporting, governance, and day-to-day decision-making.
This article from Lauren England, Audit Manager summarises the revisions to help trustees and finance professionals plan ahead.
What’s changing for charities?
The new SORP reflects updates to UK GAAP (FRS 102) and ongoing pressures for greater transparency and accountability in the charity sector.
It will introduce several important developments:
New reporting tiers
Charities will be grouped into 3 new tiers based on income and complexity, which will dictate reporting requirements.
Tier 1 – Charities applying accruals accounts with a gross income less than £500,000.
Tier 2 – Charities with a gross income of £500,000 or more but less than £15 million.
Tier 3 – All charities with a gross income of £15 million and above.
This should mean reduced burdens for smaller charities and more robust disclosures for larger ones.
Trustee reporting expectations
There’ll be a stronger emphasis on impact, risk, and governance. Trustees will need to offer clearer commentary on financial resilience, reserves and how their charity delivers public benefit. Requirements will differ across the tiers.
Income recognition rules
Revisions will better align charity accounting with modern funding arrangements and the expectations of FRS 102. Expect more focus on performance conditions, grant recognition, and donated goods/services.
Statement of cash flows
The thresholds for preparing a statement of cashflows are increasing from income of £500,000 to £15,000,000.
Operating leases
Charities will be expected to include operating leases on the balance sheet as a right of use asset. For some this may increase the asset base and push Charities closer to or over the audit thresholds.
What this means for your charity
Taking action now – from updating internal systems to training trustees and reviewing income streams – will make the transition smoother and more valuable.
These changes aren’t just technical – they’ll affect how your charity tells its story to funders, regulators, and supporters. And poor preparation could lead to compliance risks or missed opportunities to demonstrate impact.
We’re here to help
We’re already working with clients to prepare for the new charities SORP. Whether it’s reviewing current reporting processes, or advising on reserves policies, we’re here to help you turn compliance into confidence.
To discuss what the new SORP means for you, get in touch with one of the team by calling 0330 058 6559 or by emailing hello@scruttonbland.co.uk
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