Charity income thresholds

The Department for Culture, Media and Sport (DCMS) recently confirmed significant changes to charity financial thresholds in England and Wales. The income thresholds for charities determine the types of accounts they must produce, and the level of external scrutiny required.

This article was updated on 21 November - see end of page for details

The new details are set out below. We will be providing more information in the coming months and have an online Treasurers meetup event on 8 Dec where we will cover this in more detail. As always you can contact us if you have any questions on anything covered here.

External examination of accounts

The current and new thresholds are shown below. The changes are intended to come into force on or after 1 October 2026. However, the changes must go before Parliament, so there is some uncertainty around exactly when they will take effect. It seems likely new thresholds will only impact financial years starting on or after 1st January 2027.

They only apply to charities in England and Wales.

Requirement	Current threshold	New threshold
Accounts must be independently examined	Income over £25,000	Income over £40,000
Examination must be by a professionally qualified Independent Examiner	Income over £250,000	Income over £500,000
Accounts must be audited Group accounts must be prepared and audited	Income over £1,000,000 Assets over £3,260,000 Aggregate income of group £1,000,000	Income over £1,500,000 Assets over £5,000,000 Aggregate income of group £1,500,000

What’s the difference between independently examined and Examination by a professionally qualified Independent Examiner?

Independently examined means someone independent of the group should review the accounts. They do not have to be a qualified or a finance professional – but the trustees need to be confident they have relevant skills and experience.
Professionally qualified Independent Examiner means someone who has a formal Independent Examiner qualification – and is a member of an accounting professional body.

Who will this impact?

This will be welcome news for small charities run by time strapped volunteers. Groups with income between £25K and £40k will no longer require independent external scrutiny of their accounts. They may still choose to have external scrutiny, and of course will still need strong internal scrutiny from trustees and members, but the threshold increase will afford some flexibility in their approach.

For our larger member groups, the increase from £250,000 to £500,000 will offer potential time and cost savings if they no longer require qualified independent examiners.

The audit and group accounts threshold changes are unlikely to impact our groups.

Changes to the Charity SORP and accounting basis threshold

If your charity prepares accounts on an accruals basis then your annual accounts must follow the Charities Statement of Recommended Practice, commonly called the SORP. These are a set of rules and standards about what information must be presented in your annual accounts, and in what format. The SORP changes apply to all UK charities.

Groups that produce accounts and a receipts and payment basis do not have to follow the SORP in their financial reporting.

The SORP has recently been updated, with new standards in place for reporting periods that fall on or after 1 January 2026.

At the same time the Charity Commission for England and Wales has increased the threshold at which charities must produce accounts on an accruals basis. This means more charities will have the option to produce accounts on a receipts and payments basis, and so not use the SORP.

Requirement	Current threshold	New threshold
CIOs, Unincorporated associations and Trusts can choose to produce receipts and payments accounts	Income below £250,000	Income below £500,000
Charitable companies	All have to produce accounts on an acrruals basis and follow the SORP.	No change

The changes are intended to come into force on or after 1 October 2026. However, the changes must go before Parliament, so there is some uncertainty around exactly when they will take effect. It seems likely new thresholds will only impact financial years starting on or after 1st January 2027.

Who will this impact?

Most of our members groups are either CIOs or unincorporated associations and under the current threshold. As such they will still be under the new threshold and will be unaffected.

Members that are Charitable Companies will have to follow the SORP as they always have and will need to be aware of the changes in the SORP.

Our Treasurer’s meetup event on 8 Dec will cover this topic. The new SORP requirements might be a factor in considering converting from a charitable company to a CIO.

What about Scotland and Northern Ireland?

Scottish charities are set to benefit from changes to legislation which will raise the audit income threshold from £500,000 to £1 million. Secondary legislation has been laid in the Scottish Parliament which, subject to approval by MSPs, will come into force on 1 January 2026. Read more here.

The Charity Commission for Northern Ireland do not have plans to increase the audit threshold for charities, which remains at an annual gross income of £500,000. Details are available on their site.

Changes to article made on 21 November:

Clarified that changes came form the Department for Culture, Media and Sport (DCMS)
Updated information on when new thresholds are expectded to take effect
Updated information about changes to audit threshold in Scotland