Updated 2026 SORP and threshold changes: What you need to know to stay up to date
Statement of Recommended Practice (SORP)
The 2026 Statement of Recommended Practice (SORP) has officially been released, introducing significant updates that will affect how charities prepare and present their financial statements. These changes are designed to enhance transparency, promote consistency across the sector, and align reporting with modern accounting practices.
When will the changes take effect?
The updated SORP will be mandatory for reporting periods beginning on or after 1 January 2026, meaning that charities with financial years ending 31 December 2026 will be among the first fully impacted by the new framework.
2026 SORP Key Updates
The 2026 SORP brings several important revisions, including:
- Lease accounting: New recognition and measurement requirements for leases, aligning more closely with FRS 102 updates.
- Income recognition: Aligned with the FRS102 changes on the 5-step model for income recognition. Additional guidance distinguishing exchange and non-exchange transactions. Improved clarity of reporting.
- Tiered reporting: Enhanced proportionality for smaller charities, making compliance more manageable while maintaining transparency.
- Trustees’ annual reports: Refined expectations for narrative reporting, focusing on impact, governance factors, including environmental and social matters and risk management.
- Cash flow statements: Simplified presentation and classification guidance for improved clarity.
- Receipts and payments basis: Non-company charities can choose to produce receipts and payments accounts if turnover is below £500,000.
These updates reflect the charity sector’s ongoing evolution and its commitment to improving public trust through clearer, more meaningful financial reporting.
Audit threshold changes
To reduce the regulatory burden on smaller charities, the thresholds for audit and independent examination are increasing:
- Income audit threshold: £1.5 million (up from £1 million)
- Balance sheet audit threshold: £5 million in assets and £500,000 income (up from £3.26 million and £250,000)
- Independent examination income threshold: £40,000 (up from £25,000)
These changes are expected to come into effect no earlier than 1 October 2026, and will be supported by updated Charity Commission guidance in due course.
How Moore South’s charity team can help you prepare for 2026 SORP
At Moore South, our specialist Charity team is here to help you navigate the 2026 SORP transition with confidence. Whether you’re assessing how the new rules affect your organisation, updating accounting policies, or planning for new audit thresholds, our experienced advisers can provide tailored guidance and hands-on support.
From proactive planning sessions to practical training for trustees and finance teams, we’ll ensure your charity stays compliant, transparent, and prepared for the future of reporting.
If you’d like to discuss how the 2026 SORP changes may affect your charity, get in touch with a member of our team below.
Kevin Cooper – Isle of Wight office kevin.cooper@mooresouth.co.uk
Robert MacDonald – Salisbury office robert.macdonald@mooresouth.co.uk
Matthew Bather – Chichester office matthew.bather@mooresouth.co.uk
Danielle Griffin – Guildford office danielle.griffin@mooresouth.co.uk
Holly Ripley – Southampton office holly.ripley@mooresouth.co.uk