Charity accounting thresholds change on 30 September 2026: what trustees should check now

A significant set of charity accounting threshold changes takes effect in England and Wales next week. For financial years ending on or after 30 September 2026, the Charity Commission has raised several income and asset thresholds that determine whether charities need an independent examination or audit, and whether some charities can use receipts and payments accounts instead of accruals accounts.

The changes could reduce compliance work for many smaller charities, but they do not remove trustees’ responsibility for proper records, annual accounts, reporting to the Charity Commission where required, or any stricter requirement in a governing document, funding agreement or company law. The key is to apply the right threshold to the right legal structure and financial year end.

What changes from 30 September 2026?

The effective date is based on the charity’s financial year end, not the date the accounts are prepared or filed. A charity with a 31 August 2026 year end remains under the previous thresholds for that set of accounts. A charity with a 30 September 2026 or later year end uses the new thresholds.

Independent examination: more small charities may fall below the mandatory threshold

For a financial year ending on or after 30 September 2026, a charity with gross income of £40,000 or less will generally not be required by charity law to arrange an independent examination or audit. Previously the equivalent income threshold was £25,000. Where an examination is required and gross income is above £500,000, the examiner must be a member of a body specified under the Charities Act 2011; that professional-examiner threshold was previously £250,000.

That does not mean a charity can automatically cancel an examination it has already budgeted for. Trustees should check the governing document, grant agreements, loan covenants and other funding terms. Those documents can require an independent examination or audit even where charity law would not.

Receipts and payments accounts: the legal structure matters

The higher £500,000 threshold is particularly relevant to eligible unincorporated charities and charitable incorporated organisations. Subject to the applicable rules, they can use receipts and payments accounts up to the new income limit rather than preparing full accruals accounts. Above £500,000, accruals accounts are required.

Charitable companies are different. They are companies under the Companies Act as well as charities, so their accounts are prepared under company-law requirements. A charitable company should not read the new receipts-and-payments threshold as permission to switch away from accruals accounting. The Charity Commission has separate guidance for charitable companies, CIOs and trusts or unincorporated associations for exactly this reason.

Audit thresholds are higher, but an audit can still be required

For financial years ending on or after 30 September 2026, the main charity-law audit threshold rises to gross income over £1.5 million. The alternative test also changes: an audit is required where gross income is over £500,000 and gross assets are over £5 million. The previous figures were income over £250,000 and assets over £3.26 million.

A charity near either boundary should calculate the position carefully rather than relying on last year’s treatment. Charitable companies also need to consider Companies Act audit requirements separately. The Charity Commission guidance makes clear that some charitable companies may still need a Companies Act audit even where the Charities Act threshold is not met.

Do not confuse the threshold changes with SORP 2026

There is a second change running alongside the threshold reform. The Charity Commission says SORP 2026 applies to charity accounting periods starting on or after 1 January 2026. That is a different date test from the new statutory thresholds, which apply to financial years ending on or after 30 September 2026.

A charity can therefore be dealing with both changes at once. For example, a calendar-year charity preparing accounts for the year ending 31 December 2026 is within the new threshold regime and, because its accounting period began on 1 January 2026, also needs to consider SORP 2026 where accruals accounts are required.

A six-step checklist for trustees and finance teams

1. Confirm the charity’s exact financial year end. The 30 September 2026 threshold change is determined by the period end.
2. Confirm the legal structure: charitable company, CIO, trust or unincorporated association. Different accounting options can apply.
3. Estimate gross income and, where relevant, gross assets for the year before deciding whether an examination or audit is required.
4. Check the governing document and major funding agreements for examination or audit requirements that are stricter than charity law.
5. If the charity uses accruals accounts, confirm whether SORP 2026 applies to the accounting period and plan for any changed disclosures or accounting treatment.
6. Keep the underlying bookkeeping clean even where external scrutiny reduces: reconcile bank accounts, retain invoices and receipts, document restricted funds, and keep Gift Aid and payroll records complete.

What should smaller charities do now?

The immediate task is not to change accounting methods simply because the thresholds are higher. First establish which rules apply to the current financial year, then discuss any change with the person preparing or examining the accounts. A move from accruals to receipts and payments accounting, or from audit to independent examination, can affect comparability, funder expectations and internal reporting even where it is legally permitted.

For day-to-day finance, the reform is a useful reminder that lighter external reporting should not mean weaker bookkeeping. Trustees still need records that explain the charity’s transactions and financial position. Good monthly reconciliation, clear income and expense coding, and visibility over restricted and unrestricted cash make year-end reporting easier whichever threshold applies.