What charity trustees and finance teams need to know about the 2026 SORP revisions

The new Charities SORP (Statement of Recommended Practice) was published on 31 October 2025. With this updated version taking effect for accounting periods starting on or after 1 January 2026.

The new SORP reflects updates to UK GAAP (FRS 102) and ongoing pressures for greater transparency and accountability in the charity sector.

Lauren England, Audit Manager explains why it’s vital that both trustees and finance teams of charities understand what’s changing as it affects reporting, governance, and day-to-day decision-making.

There are several important developments that have been introduced as part of the SORP 2026 revisions.

New reporting tiers
Charities will be grouped into 3 new tiers based on income and complexity.

This will dictate their reporting requirements and means there’ll be reduced burdens for smaller charities and more robust disclosures for larger ones.

Tier 1 – Charities applying accruals accounts with a gross income of not more than £500,000.

Tier 2 – Charities with a gross income of above £500,000 but not more than £15 million.

Tier 3 – All charities with a gross income of £15 million and above.

It’s important to remember that the Companies Act size limits will still apply for any Charity also registered as a Company, and as such some reporting requirements governed by the Companies Act and FRS102 will apply regardless of which tier the Charity falls into under SORP.

The alignment of the income benchmark here would suggest that the intent is to predominantly target Tier 3 Charities with these requirements.

As a reminder the company size thresholds for accounting periods that begin on or after 6 April 2025 are:

Trustee reporting expectations (module 1)
The requirements of the Trustees report have now been split into these 3 tiers.

Charities are of course encouraged to provide information in excess of their required tier.  But the requirements for each tier are detailed below:

Reports have been restructured to improve clarity and usability:

So Trustees should consider stripping out previous reporting structures and re-building the reports to align with the SORP suggestions.

Prompt questions have been added throughout to enhance the quality of impact reporting:

The aim here is to get Trustees thinking about the work of the Charity and the public benefit it delivers and reporting it accordingly.

It’s easy to report on hard facts and figures from the year under review, but much harder to articulate the often non-monetary impact and influence on the public benefit as a whole. But it’s this that’s the key driver of a Charity’s impact and should be brought to the forefront of reporting.

Enhanced volunteer usage information has been added to help users understand the scale and nature of activities and input undertaken by volunteers.

This is important as the measurement of volunteer contribution in monetary terms has always been difficult to quantify. This in turn makes inclusion in the SOFA, in line with module 6, inconsistent across the sector.

Changes have been made to reserves reporting

Aiding users understanding of the connection to the financial statements.

Sustainability reporting is now required for Tier 3 charities.

Tier 1 and 2 charities are simply just ‘encouraged’ to report on how the charity is responding to managing environmental, governance and social matters.

Whereas Tier 3 charities ‘must’ provide a summary of this. This could include:

• Use of KPI data on environmental targets
• Details of privacy and data security
• Board diversity details
• Business ethics details

Those charitable companies who fall within the scope of the Energy and Carbon Reporting regulations must also provide the disclosures required under those regulations.

Cash flow statement expectations (module 14)

The thresholds upon which a cash flow statement must be prepared have also changed.

This will come as a welcome relief to many smaller charities who, as the threshold for preparation have increased from £500k to £15m, now fall under Tier 1 and 2 charities who do not need to prepare a cash flow (but may of course over disclose if desired).

Tier 3 Charities however must provide a statement of cash flows, even if they meet the definition of a small entity in FRS102.

For example, the employees and assets of a charity may be minimal and so their definition is of a small company, but if their income is over £15m then a cash flow must still be prepared to meet the Charity requirements.

Similarly, an entity may breach medium size company thresholds, but be under the £15 million income charity threshold. In this case a cash flow statement would need to be prepared to meet Company requirements rather than charity ones.

The SORP provides a template for cash flow statements in table 11 of module 14 which can be adapted for individual requirements.

The SORP also gives good guidance on which items to include under the 3 key headings of a cash flow statement – operating, investing and financing.

Importantly this release of the new SORP offers a good opportunity for Charities to step back and critically review current allocations to re-confirm the content is compliant.

We’re here to help

We’re already working with charities to prepare for the new 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 your charity, get in touch with Lauren or one of the team by calling 0330 058 6559 or by emailing hello@scruttonbland.co.uk