Your first accounts under the new Charities SORP — what small charities actually need to do

If you look after the books for a small charity, the new Charities SORP — the rulebook for how charity accounts are drawn up — is now in force, and the good news is that for most small charities it’s designed to make life a bit easier, not harder. It applies to accounting periods beginning on or after 1 January 2026, so if your financial year started this year, these are the rules your next set of accounts will be prepared under. Here’s the plain-English version of what’s changed and what to actually do about it.

The headline is a new tiered system based on your gross income, with lighter requirements for smaller charities. Tier 1 is income up to £500,000, Tier 2 is £500,000 to £15 million, and only Tier 3 — above £15 million — faces the fullest requirements. The vast majority of charities on here are firmly in Tier 1, which is the lightest tier by design. One concrete example: a detailed cash flow statement is now only required of the largest charities, above £15 million, which takes a chunk of work off everyone below that.

A genuinely useful change if you’re in England or Wales: the income threshold at which you have to prepare the fuller “accruals” accounts has doubled, from £250,000 to £500,000. In plain terms, that means thousands more small charities now have the option of simpler receipts-and-payments accounts instead. If you’re a non-company charity sitting between those two figures, it’s worth asking your examiner whether you can switch to the simpler basis. (A note for Scotland and Northern Ireland: the £250,000 accruals threshold still applies there, so this particular easing is England-and-Wales only for now.)

Two things apply across the board and are worth flagging to your accountant early: there are new, clearer rules on how you account for income — especially the distinction between grants, contracts and donations — and on leases, with charity-specific examples to help. If your charity rents its premises or equipment, the lease changes are the ones most likely to touch your balance sheet, so don’t assume they’re only a big-charity problem — have a quick word about whether they affect you.

The trustees’ annual report has also been refreshed: there are now dedicated sections for impact reporting and for environmental, social and governance matters, plus clearer guidance on explaining your reserves and your plans for the future. That’s no bad thing, because it’s exactly what funders increasingly want to see anyway — treat it as a shop window rather than a chore.

So, practically: work out which tier you’re in (almost certainly Tier 1), check whether the doubled England-and-Wales threshold lets you simplify, and have one short conversation with your independent examiner or accountant before your year-end rather than after it. Getting the basis right up front saves unpicking it later.

Happy to help anyone work out which tier they’re in, or whether they can simplify. There are free plain-English finance and governance guides at thecommitteeroom.co.uk.

Rachel Wall ACG — chartered governance professional