Charities SORP 2026: a plain English guide for trustees and treasurers

Charity trustees reviewing annual accounts prepared under the Charities SORP 2026

Most guides to the new Charities SORP are written for accountants. This one is written for the trustees who have to approve the accounts.

The Charities SORP 2026 was published on 31 October 2025. It applies to every charity in the UK that prepares accruals accounts, for reporting periods starting on or after 1 January 2026. Most charities are now in their first SORP 2026 year.

On 16 September 2026 the Charity Commission urged all charities to check the new rules, and published new step-by-step guidance on preparing annual accounts (Charity Commission, 16 September 2026). This guide sets out what has changed, what it means for a board, and what to do before your year end.

It replaces our earlier article on the draft SORP, which was written while the proposals were still out for consultation. Several details changed between the draft and the final version.

Two dates that are easy to confuse

Two separate sets of changes land in 2026, and they start on different tests.

The new SORP runs on when your year starts. It applies to reporting periods beginning on or after 1 January 2026.

The new audit and examination thresholds in England and Wales run on when your year ends. They apply to financial years ending on or after 30 September 2026 (The Charities Acts 1992 and 2011 (Substitution of Sums) Order 2026, article 5(6)).

That means a charity can be under the old SORP and the new thresholds in the same set of accounts. A year running from 1 October 2025 to 30 September 2026 is exactly that case. It started before 1 January 2026, so the previous SORP still applies. It ends on 30 September 2026, so the new thresholds apply.

A year ending 31 December 2026 or 31 March 2027 picks up both changes at once.

We cover the threshold changes in detail in our guide to the new charity audit and examination thresholds.

“Simpler” is the wrong word

The new SORP is often described as simpler for small charities. That is only partly true, and it matters for how trustees plan.

The SORP now sorts charities into three tiers by income. The lowest tier has fewer requirements than the tiers above it. It does not have fewer requirements than it had before. Narrative reporting expectations have gone up across all three tiers.

So the right question for a smaller charity is which requirements apply to its tier, not how much it can now leave out.

The three tiers

Your tier is set by your gross income for the year.

TierGross income
Tier 1Not more than £500,000
Tier 2More than £500,000 and not more than £15 million
Tier 3More than £15 million

Two points are worth taking to the board.

It is based on income only. Assets and staff numbers do not affect your tier.

It is based on this year’s income. There is no averaging across years, so a charity close to £500,000 could move between Tier 1 and Tier 2 from one year to the next. If your income is near a boundary, plan for both.

The tiers only change the requirements in a handful of areas. The main ones are:

Everything else, including the new lease and income rules below, applies to every tier.

Leases now go on the balance sheet

This is the change most likely to alter the look of your accounts.

Under the previous rules, a charity renting its office treated the rent as an annual cost and nothing more. Under SORP 2026, which follows the updated FRS 102, the distinction between operating and finance leases has gone for charities that rent assets. For most leases, you now show two things on the balance sheet (FRC, FRS 102 periodic review):

In the Statement of Financial Activities, the rent charge is replaced by depreciation on the asset and interest on the liability. The total cost over the life of the lease is broadly the same, but more of it falls in the early years.

There are two exemptions: short-term leases and leases of low-value assets. There is no tier relief. A Tier 1 charity renting office space applies the same model as a Tier 3 charity.

On transition, charities do not restate last year’s figures. The lease is brought onto the balance sheet from the start of the first SORP 2026 year.

What this means for the board. Your balance sheet will show higher assets and higher liabilities. If a funder, lender or your own reserves policy uses balance sheet figures, check how those figures will move before the accounts are finalised, not after.

Income: when you can count it

SORP 2026 adds guidance on income from exchange transactions. These are arrangements where the charity is paid to provide a specific service or goods. The updated FRS 102 uses a five-step model for this income. In broad terms, it is recognised as you deliver what you have been paid to deliver, not simply when the money arrives.

The SORP also clarifies when a grant counts as an exchange transaction and when it does not (Charities SORP 2026, summary of changes, Module 5). Some grants read like donations but work like contracts, with a defined service, a defined output and a payment tied to it. Those may now need to be recognised as the work is done.

For legacies, Tier 2 and Tier 3 charities must now explain in more detail how legacy income has been recognised.

What this means for the board. If a large grant or contract arrives near your year end, the income figure in your accounts may not match the cash in the bank. Review your main funding agreements now, so the treatment is agreed with your accountant before the year end rather than argued about afterwards.

The Trustees’ Annual Report asks for more

The Trustees’ Annual Report has always been read closely by funders. What has changed is the standard it has to meet.

The Charity Commission has said its own guidance on the Trustees’ Annual Report will be updated in 2026.

What this means for the board. Impact reporting is the hardest part to write at the last minute, because it depends on information you should be collecting through the year. If you do not already track outcomes, start now.

Other changes worth knowing about

What has not changed

The core of charity accounting is the same. You still account for restricted and unrestricted funds separately. The Statement of Financial Activities is still the main statement.

In England and Wales, non-company charities below the threshold can still choose simpler receipts and payments accounts instead of accruals accounts, although this is not always the right option for all charities. That threshold rises from £250,000 to £500,000 for financial years ending on or after 30 September 2026. Charitable companies must still prepare accruals accounts under company law.

Scotland and Northern Ireland

The SORP applies across the UK, but the rules around it differ.

Scotland. The Charities Accounts (Scotland) Amendment Regulations 2025 bring SORP 2026 into Scottish law for financial years beginning on or after 1 January 2026. The same regulations raised the Scottish audit threshold from £500,000 to £1 million. In Scotland, accruals accounts are still required where gross income is £250,000 or more.

Northern Ireland. The Charity Commission for Northern Ireland has confirmed SORP 2026 applies for periods starting on or after 1 January 2026. Accruals accounts are still required where gross income is £250,000 or more.

The threshold changes described above for England and Wales do not apply in either country.

What to do before your year end

  1. Confirm which rules apply to this year. Check your year start date against the SORP and your year end date against the new thresholds.
  2. Work out your tier. Use your forecast income for this year. If you are close to £500,000 or £15 million, prepare for both outcomes.
  3. List your leases. Include property, vehicles and equipment. Gather the start dates, end dates and payments for each.
  4. Review your main funding agreements. Flag any grant that pays for a defined service, so its treatment can be agreed early.
  5. Start the impact section of your annual report. Decide what you will measure and who will collect it.
  6. Revisit your reserves policy. Check whether the new lease figures change how your reserves are calculated.
  7. Speak to your examiner or auditor early. A short conversation now avoids a long delay at year end.

Frequently asked questions

When does the Charities SORP 2026 start?

It applies to reporting periods beginning on or after 1 January 2026. Most charities are now in their first SORP 2026 year. A charity with a 31 March year end started its first SORP 2026 year on 1 April 2026.

Does SORP 2026 apply to small charities?

Yes, if they prepare accruals accounts. Charities with income up to £500,000 are in Tier 1 and have fewer requirements than larger charities, but the lease and income rules apply to them in full. Non-company charities in England and Wales that prepare receipts and payments accounts do not follow the SORP.

Which tier is my charity in?

Tier 1 covers gross income of not more than £500,000. Tier 2 covers income above £500,000 and up to £15 million. Tier 3 covers income above £15 million. Your tier is based on the current year’s income only.

Do small charities have to put leases on the balance sheet?

Yes. There is no exemption based on tier. The exemptions are for short-term leases and leases of low-value assets.

Is the Trustees’ Annual Report changing?

Yes. Impact reporting is now required of every charity, and there are new sections on environmental, social and governance matters, reserves and future plans.

Talk to us about your first SORP 2026 accounts

Enaid Accountancy works only with charities and third sector organisations. We prepare year end accounts, carry out independent examinations and train finance teams and trustees on the new requirements.

If you want to know how SORP 2026 will change your accounts before your year end, get in touch with the team.

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