Prepare charity accounts using SORP

All registered charities must prepare annual accounts and a trustees' annual report. How you prepare these accounts depends on your charity's income, assets, and legal structure.

The Statement of Recommended Practice (SORP) provides the framework for charity accounting under UK accounting standards. Following SORP ensures your accounts give a true and fair view of your charity's activities and financial position.

Which accounting method to use

Your choice of accounting method depends on your charity's size and legal structure. Smaller non-company charities can use simpler receipts and payments accounts, while larger charities and all charitable companies must use full accruals accounts.

Accounting thresholds

The thresholds determining which accounting requirements apply to your charity are changing from October 2026. Check which thresholds apply to your current financial year.

Current thresholds (until September 2026)

These thresholds apply to accounting years ending before 30 September 2026:

New thresholds (from October 2026)

Significantly increased thresholds will apply from accounting years ending on or after 30 September 2026. These changes are expected to save the sector an estimated £47 million per year in audit costs:

Receipts and payments accounts

Receipts and payments accounts are the simplest form of charity accounts. They show money coming in and going out during the year, plus a statement of assets and liabilities at the year end.

You can only use this method if your charity is not a charitable company or CIO, and your gross income is below the threshold (£250,000 until October 2026, then £500,000).

Accruals accounts

Accruals accounts show a true and fair view of your charity's financial position. They must include a statement of financial activities (SoFA), a balance sheet, and explanatory notes following SORP recommendations.

You must use accruals accounts if:

• Your charity is a company or CIO (regardless of income)
• Your gross income exceeds the threshold
• Your governing document requires 'true and fair' accounts or a balance sheet

SORP 2026 three-tier reporting

From January 2026, a new three-tier reporting structure will apply based on charity income. This determines the level of disclosure required in your accounts:

Audit and independent examination

Whether your accounts need external scrutiny depends on your charity's income and assets. The requirements differ based on whether you need a full statutory audit or an independent examination.

Independent examination

Independent examination is a lighter-touch review suitable for smaller charities. The qualifications required for your examiner depend on your income level:

Statutory audit

Larger charities must have a full statutory audit conducted by a registered auditor. This is more expensive but provides a higher level of assurance.

Typical audit costs for charities with income between £1 million and £2 million are around £9,600 (2024 figures). The October 2026 threshold increases will reduce the number of charities requiring statutory audit.

Trustees' annual report

All registered charities must prepare a trustees' annual report alongside their accounts. This explains what your charity has done during the year and how it has delivered public benefit.

Filing your accounts

You must file your accounts with the Charity Commission (or OSCR in Scotland) within the deadline. There are no extensions available.

Group accounts

If your charity controls subsidiaries (whether charitable or non-charitable), you may need to prepare consolidated group accounts. This depends on the aggregate income of the group.

Comparison with CIC reporting

Community Interest Companies (CICs) have different reporting requirements from charities. If you are considering which structure is appropriate for your social enterprise, understanding these differences can help inform your decision.

CIC annual report

CICs must file an annual CIC report (Form CIC34) demonstrating they continue to satisfy the community interest test:

CIC size thresholds

CICs follow company size thresholds rather than charity thresholds:

Key dates for 2026/27

Be aware of these important dates affecting charity accounting:

• 1 January 2026 - SORP 2026 applies to reporting periods starting on or after this date
• 30 September 2026 - New increased thresholds apply to accounting years ending on or after this date
• 6 April 2025 - New small company thresholds for charitable companies (turnover £15 million, balance sheet £7.5 million)

Plan ahead for these changes. If your charity is close to current thresholds, the October 2026 changes may mean you can use simpler reporting or avoid audit requirements.