New charity accounting rules on the horizon – what it could mean for you

Making sense of the new SORP reporting tiers

What’s changing?

Charities may soon face changes in the way they prepare their accounts. A new version of the SORP – the rules that guide charity accounting – is on the way, and one of its main proposals is the introduction of three reporting “tiers”. These tiers are designed to give smaller organisations simpler requirements while asking larger charities to provide more detailed information.

The debate on thresholds

Most in the sector agree this approach is fairer than a one-size-fits-all system. However, there is disagreement about where the dividing lines should be drawn. Many believe the threshold for the lowest tier has been set too low, which would push a large number of mid-sized charities into more complex reporting than they can realistically manage. Others have suggested aligning the tiers with existing audit thresholds to avoid confusion.

Next steps from regulators

Regulators are now considering the feedback and may still adjust the thresholds before the new rules are finalised. The updated SORP is expected to apply to financial years beginning in January 2026, giving charities a little over a year to prepare.

What this means for charities

For the VCSE sector, the impact could be mixed. Smaller organisations may benefit from reduced paperwork if the tiers are set at a sensible level, but those caught just above the line could face higher costs and increased demand on staff or trustees. This could make growth more challenging for community groups that are expanding but still lack the infrastructure of larger national charities. On the positive side, stronger reporting requirements for the biggest organisations should improve transparency and build public and funder confidence.

How to prepare

What happens next will depend on how the thresholds are set, but the message is clear: change is coming. VCSE organisations should start thinking about what this might mean for them, check which tier they are likely to fall into, and prepare trustees and staff for possible new responsibilities. By planning ahead, charities can reduce the risk of being caught out and make the most of a system that, if balanced properly, should ease the burden on the smallest while improving trust across the whole sector.

Read the Charity Commission blog: Reflections on the consultation for the Charities SORP 2026 from the Charities SORP-making body here.

Read what Civil Society Consulting say here.