A charity guide to SORP in 2026

Looking after charity finances is complex. Reporting in this sector can be particularly challenging. There is pressure to cover all areas of the organisation, with added scrutiny from stakeholders, including trustees and external auditors. 

The Charities Statement of Recommended Practice (SORP) is a framework designed to help charities prepare their accounts in accordance with UK accounting standards. Developed by the Charity Commission of England and Wales, the Office of the Scottish Charity Regulator, and the Charity Commission of Northern Ireland, the Charities SORP is approved by the Financial Reporting Council, the independent regulator of corporate governance, financial report, auditors, and actuaries. 

According to the UK Government website, the Charities SORP is designed to: 

• Help trustees meet legal requirement for their accounts to give a true and fair view

• Encourage consistency in charity accounting standards

• Give recommendations for charity annual reporting 

In 2025, the Charities SORP underwent a public consultation, leading to a number of changes to ensure it met modern accounting standards and charity laws. As a result of the public consultation, a number of changes were brought in, including tiered reporting to determine what charities have to report on determined by their revenue.  

Below, we explore in more detail the recent changes to Charities SORP and how charities can prepare for them in 2026 and beyond. You can also find out more in our upcoming webinar in partnership with financial software providers AccountsIQ on Thursday 22 January. 

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What are the changes to Charities SORP in 2026? 

According to government guidance, all charities must use the SORP to prepare their accounts, unless trustees opt to prepare receipts and payments accounts and the charity is a non-company charity with an income of £250,000 or less in the reporting period.  

For accounting periods starting on or after January 2026, the new Charities SORP changes apply. The changes have been fully outlined on a dedicated microsite. 

The changes begin with a new tiered reporting system which comes with differing levels of disclosure requirements. The three tiers are: 

• Tier 1: Charities with income up to £500,000

• Tier 2: Income between £500,000 and £15 million

• Tier 3: Income over £15 million 

Charities spanning all tiers must include impact reporting in their trustees’ annual report and must set out their future financial plans, providing people with an understanding of their short and long-term aims.  

Charities in Tiers 2 and 3 should also provide an explanation of material legacy income that has been recognised in accounts but not received. 

Charities in Tier 3 (with an income of more than £15 million) must also report on environmental, social, and governance (ESG) matters, while charities in other tiers are “encouraged to consider the needs of stakeholders when reporting in this area”.  

“For example, the report could provide details of the key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and a description of the calculations on which those key performance indicators are based,” the new SORP document outlines. 

“Governance matters may include details of privacy, cyber security, data security and business ethics, whilst social matters may include information on employee engagement and wellbeing, board diversity and inclusion and how a charity supports its local community.” 

In addition to the new sustainability requirements, charities across all tiers that are not holding reserves or with negative net assets on their balance sheets are required to explain why it is still operating as a going concern.  

In areas aside from the Trustees’ Annual Report, cash flow statements have also changed and will not be required for charities with income below £15 million, unless a cash flow statement is still required under FRS102, where they don’t meet the definition of a small entity. Previously, charities with an income of more than £500,000 had to produce a cash flow statement. This change is designed to help smaller charities by reducing reporting complexity, while still ensuring that the financial statements provide sufficient information for users to understand the charity’s financial position. 

Income recognition has also changed, split now into exchange transactions and non-exchange transactions, such as donations and grants.