This guide focuses on the reporting requirements introduced in the new statement of recommended practice for charities (SORP 2026). This applies for periods commencing on or after 1 January 2026 and introduces tiered requirements for charities.
- Tier 1 – charities with income less than £500,000
- Tier 2 – charities with income between £500,000 and £15,000,000
- Tier 3 – charities with income over £15,000,000
The audit threshold is currently £1,000,000 and expected to rise to £1,500,000 for charities in England and Wales, although the commencement date has not yet been published. The audit threshold for charities in Scotland is £1,000,000 for periods commencing on or after 1 January 2026 (increased from the current £500,000 limit). As a result some charities in tier 2 will be audited and some will require only an independent examination of their accounts.
Charities must assess their tiering and regulation requirements for each reporting period. There is no two year rule or other exemptions to manage fluctuations in income. Charites who expect their income to fluctuate around the thresholds may want to consider whether they should apply the requirements of the higher tier for consistency.
Charities in tier 1 must comply with the requirements in tier 1, and can prepare their accounts on either an activities basis or using natural classifications; charities in tier 2 must prepare accounts on an activity basis and comply with the requirements in tier 1 and tier 2; and charities in tier 3 must prepare accounts on an activity basis and comply with the requirements in tier 1, tier 2 and tier 3.
The SORP retains the distinctions of ‘must’, ‘should’ and ‘may’ within the tiers. Where a ‘must’ requirement is not followed non-adherence to that requirement is a departure from the SORP and charities are required to disclose the fact.
Appendices.
The following appendices cover the disclosure requirements by tier. The appendices are cumulative therefore the Tier 3 appendix covers all the requirements for tiers 1, 2 and 3. Please only select the one appendix suitable for your tier.
Additional disclosures for charitable companies are set out separately in appendix 4.
Please choose the appendix relevant to your tier and the company checklist if required.
