Charity accounting thresholds

Receipts & Payments (R&P) accounts are the cash-based option: a statement of money in and money out, plus a statement of assets and liabilities. Simpler; permitted only for non-company charities below the income threshold (currently £250k, rising to £500k from October 2026). Cannot be used by CIOs, charitable companies, or CICs (despite CIOs technically being non-company).

Accruals accountsare the “true and fair view” option: a statement of financial activities (SoFA), balance sheet, notes. Compulsory above the threshold, and for all incorporated forms. Must follow the Charities SORP — the new SORP 2026 applies to accounting periods beginning on or after 1 January 2026.

The new SORP, published 31 October 2025, applies a three-tier proportionality framework:

• Tier 1 — income up to £500,000 (most small charities)
• Tier 2 — £500,000 – £15m
• Tier 3 — over £15m

Charities comply cumulatively with their own tier and all tiers below. Key SORP 2026 changes affecting small charities:

• Lease accounting — most operating leases must be brought on-balance-sheet as a right-of-use asset and liability (Module 10B). New peppercorn-rent rule recognises the donation element of below-market leases at fair value — relevant for village halls and small charities at nominal rent
• Income recognition — five-step IFRS 15-style model for exchange transactions (services for fees, contracts with local authorities)
• Trustees' Annual Report — mandatory impact reporting (all tiers), refreshed reserves narrative, mandatory future plans, going-concern question for loss-making charities

Scotland:all Scottish charities register with OSCR regardless of income. Full accounts required when income exceeds £25,000. R&P option capped at £250,000. From accounting periods beginning on or after 1 January 2026, OSCR's audit threshold rises from £500,000 to £1,000,000 — still lower than the new £1.5m E&W threshold.

Northern Ireland: CCNI registration on call-forward (no minimum income threshold). Thresholds broadly follow GB but with NI-specific filing portals. CCNI applies SORP 2026 in parallel with the Charity Commission and OSCR.

1. Close the books within a month of year end. Reconcile bank, gift aid claims, restricted vs unrestricted balances
2. Prepare draft accounts— R&P or accruals depending on threshold and form
3. Draft the Trustees' Annual Report — required where accounts are filed; longer narrative under SORP 2026
4. Independent examination (where required) — see independent examination
5. Trustees approve the accounts at a minuted board meeting
6. File the annual return with the Charity Commission within 10 months of year end. Charitable companies and CICs also file with Companies House
7. Present to members at the AGM where applicable

• Charity audit threshold checker — free tool →

  Plug in your income, assets and structure to see which scrutiny tier applies under the new 1 October 2026 thresholds. Includes a sharable email summary.

• Independent examination →

  Finding an examiner, what they need, what SORP 2026 changed.

• Gift Aid for community groups →

  The 25% top-up and the small-donations scheme — both feed into accounts.

• Community group governance basics →

  The trustee duties and decision-making framework.

• Compliance hub →

  All compliance guides on one page.

• Charities Act 2011 — Part 8 (annual returns, accounts, audit)
• Charities (Accounts and Reports) Regulations 2008 (as amended)
• Charities SORP 2026 — published 31 October 2025; applies to periods beginning on or after 1 January 2026
• DCMS announcement on charity financial thresholds (31 October 2025; in force 1 October 2026)
• Charity Commission CC15c Charity reporting and accounting: the essentials
• OSCR Scottish Charity Accounts Regulations 2006; OSCR audit threshold rise to £1m (1 January 2026)