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Charity Accounting Thresholds from 30 September 2026: What Changes for Trustees?

The new charity accounting thresholds from 30 September 2026 change when your charity needs an independent examination, receipts and payments accounts, a statutory audit or group accounts. Here is what trustees in England and Wales need to know.

Written by a senior charity accountant
9 minute read
Updated September 2026

Charity accounting thresholds from 30 September 2026 are changing significantly for charities in England and Wales. The new rules increase the income thresholds for independent examination, receipts and payments accounts, qualified independent examiners, statutory audits and group accounts. For many small and medium sized charities, this should mean simpler reporting and potentially lower professional costs.

Before you celebrate a lighter compliance burden, though, it is worth pausing. In my years advising trustees, I have seen plenty of well meaning boards assume that a higher threshold automatically removes every obligation. It rarely does. Your governing document, a funding agreement or another legal requirement can still force an audit or independent examination even where charity law says you no longer need one. Let me walk you through exactly what changes, when it applies and what you should do next.

Key Takeaways

For financial years ending on or after 30 September 2026:

  • The independent examination threshold rises from over £25,000 to over £40,000 of gross income.
  • CIOs and unincorporated charities may generally use receipts and payments accounts where gross income is £500,000 or less, increased from £250,000.
  • A professionally qualified independent examiner is required where gross income is over £500,000, increased from £250,000.
  • The main statutory audit income threshold increases from over £1 million to over £1.5 million.
  • The alternative audit test becomes gross income over £500,000 and gross assets over £5 million.
  • The group accounts threshold rises from £1 million to £1.5 million of total group income.
  • The annual return threshold of over £10,000 and the £25,000 threshold for sending accounts and the Trustees' Annual Report to the Charity Commission remain unchanged.
  • Your governing document, funding agreement or another legal requirement can still require an audit or independent examination even where charity law does not.

The new thresholds apply to charities in England and Wales. Different requirements apply in Scotland and Northern Ireland.

What are the new charity accounting thresholds from 30 September 2026?

The new charity accounting thresholds increase the point at which many charities must move to more complex accounting or external scrutiny. The changes apply according to the charity's financial year end, so a year ending on 30 September 2026 is within the new regime, while a year ending on 29 September 2026 is not.

The table below sets out the old and new thresholds side by side so you can see the changes at a glance. I would suggest printing it off and taking it to your next trustee meeting. It makes the discussion far quicker.

Requirement Before 30 September 2026 Financial years ending on or after 30 September 2026
No statutory external scrutiny normally required Income £25,000 or less Income £40,000 or less
Independent examination required Income over £25,000 Income over £40,000
Receipts and payments accounts available to eligible non company charities Income £250,000 or less Income £500,000 or less
Qualified independent examiner required Income over £250,000 Income over £500,000
Audit based on income Income over £1 million Income over £1.5 million
Alternative audit test Income over £250,000 and assets over £3.26 million Income over £500,000 and assets over £5 million
Group accounts and audit Group income over £1 million Group income over £1.5 million

You can check the Charity Commission's official comparison here: Threshold changes at a glance, Charity Commission.

When do the new charity accounting thresholds apply?

The new thresholds apply to financial years ending on or after 30 September 2026. The financial year end is therefore critical. Trustees should not simply apply the new rules because the accounts are being prepared or filed after September 2026.

In practice, I have seen this trip up charities that file late. What matters is the date the accounting period ends, not the date you get around to completing the paperwork. Here are a few examples.

Charity year end Which threshold rules apply?
29 September 2026 Previous thresholds
30 September 2026 New thresholds
31 December 2026 New thresholds
31 March 2027 New thresholds

This should be checked before deciding whether an independent examination, audit or particular accounting basis is required. If you are unsure which side of the line you fall, our guide to small charity annual accounts is a useful starting point.

Does the independent examination threshold increase to £40,000?

Yes. For financial years ending on or after 30 September 2026, charities with gross income of £40,000 or less do not normally require an independent examination or audit under the statutory charity thresholds. Once gross income is over £40,000, independent scrutiny will normally be required unless an audit applies instead.

This change may particularly benefit charities with annual income between £25,000 and £40,000. If that is you, you could be looking at a genuine saving on professional fees. However, trustees must still check:

  • the charity's governing document
  • funding and grant agreements
  • lender requirements
  • any specific Charity Commission direction

These may require external scrutiny even where the statutory income threshold does not. Our pages on independent examination for charities and when is independent examination required for a UK charity explain this in more detail.

Who needs a qualified independent examiner from 30 September 2026?

A professionally qualified independent examiner becomes mandatory where gross income is over £500,000 and the charity is eligible to use independent examination rather than audit. Previously, the professional qualification threshold was over £250,000.

For charities with income over £40,000 but not more than £500,000, the examiner still needs to be independent and have the competence and experience required to carry out the examination properly.

Trustees should therefore select an examiner based not merely on whether a professional qualification is legally mandatory, but also on the complexity of the charity's finances, restricted funds, grants, payroll, investments and internal controls. It pays to think about the substance of the review, not just the statutory minimum. You can read more in our guide on what is a charity independent examination.

Can charities with income up to £500,000 use receipts and payments accounts?

Many can, but the charity's legal structure matters. For financial years ending on or after 30 September 2026, a CIO, charitable trust or unincorporated association with gross income of £500,000 or less can generally choose receipts and payments accounts unless its governing document requires accruals accounts or the trustees choose accrual accounting.

This can significantly simplify accounting for charities previously required to prepare accruals accounts because their income exceeded £250,000.

Can a CIO prepare receipts and payments accounts?

Yes. A CIO with gross income of £500,000 or less can normally prepare receipts and payments accounts for a financial year ending on or after 30 September 2026, subject to its governing document and any other applicable requirements. Our accountants for CIOs can confirm what applies to your charity.

Can a charitable company use receipts and payments accounts?

No. A charitable company should not assume the £500,000 receipts and payments threshold applies to it. Charitable companies must prepare company accounts and follow the applicable Companies Act and charity accounting requirements. See our guide to accountants for a charitable company.

This distinction is particularly important because the new £500,000 threshold is sometimes described simply as the "charity accounts threshold", which can cause confusion. Trustees of charitable companies should also check whether a separate audit requirement arises under the Companies Act 2006. The Companies House audit exemption guidance is a helpful reference on this point.

What is the charity audit threshold from 30 September 2026?

For financial years ending on or after 30 September 2026, a statutory charity audit is normally required where gross income is over £1.5 million, or where gross income is over £500,000 and gross assets exceed £5 million. These tests replace the previous £1 million income and £3.26 million asset thresholds.

This could have a substantial effect on charities with income between £1 million and £1.5 million. Where no other audit requirement applies, such a charity may now be eligible for an independent examination rather than a full statutory audit.

That can reduce compliance costs, but trustees should consider whether an audit remains desirable or contractually necessary before changing arrangements. If you are weighing up the two options, our article on when is an audit required instead of independent examination will help you decide.

Do funding agreements or governing documents override the new thresholds?

They can still create additional requirements. A charity might fall below the statutory audit or independent examination threshold but still be required to obtain one because its constitution, trust deed, articles, grant agreement or funding contract says so.

Trustees should therefore review documents before cancelling an existing audit or changing examiner. A sensible review should cover:

  1. 1The charity's legal structure.
  2. 2The financial year end.
  3. 3Gross income for the relevant period.
  4. 4Gross assets.
  5. 5Any subsidiary undertakings.
  6. 6The governing document.
  7. 7Grant and funding conditions.
  8. 8Any Companies Act requirements for charitable companies.

Are the Charity Commission filing thresholds also changing?

No. The increased accounting and scrutiny thresholds do not mean all Charity Commission filing thresholds are increasing. Registered charities with income over £10,000 still need to submit an annual return, while the £25,000 threshold for sending accounts and the Trustees' Annual Report to the Commission remains unchanged.

This distinction is important. For example, a charity with income of £35,000 may no longer require an independent examination under the new rules, but it may still have annual reporting and filing obligations. Our service page on annual return to the Charity Commission covers what is due and when.

How are the new thresholds different from SORP 2026?

The charity accounting threshold changes and SORP 2026 are separate reforms with different trigger dates. The threshold changes apply to financial years ending on or after 30 September 2026, while SORP 2026 applies to reporting periods starting on or after 1 January 2026.

This means trustees must consider both dates. For example, a 12 month accounting period running from 1 October 2025 to 30 September 2026 falls within the new statutory threshold rules because it ends on 30 September 2026. However, that accounting period started before 1 January 2026, so the SORP 2026 commencement date needs to be considered separately.

SORP 2026 also introduces three reporting tiers:

Tier 1

Income up to £500,000

Tier 2

Income above £500,000 and up to £15 million

Tier 3

Income above £15 million

It also includes revised requirements concerning areas such as income recognition, leases, reserves reporting and future plans. Trustees preparing accruals accounts can read more on our SORP and charity accounting framework FAQs or review the official Charities SORP guidance.

What happens to the group accounts threshold?

For financial years ending on or after 30 September 2026, the income threshold at which qualifying charity groups must prepare group accounts and have them audited rises from £1 million to £1.5 million of aggregate group income after removing transactions between organisations within the group.

Charities with trading subsidiaries should therefore review the combined figures rather than considering the parent charity's income in isolation. Our guide to charity trading activities and subsidiaries explains how trading arms can affect the group picture.

What should trustees do before preparing their 2026 or 2027 accounts?

Trustees should determine the correct accounting and scrutiny requirements before instructing an auditor, independent examiner or accounts preparer. Starting with the charity's legal structure, year end, gross income and assets can prevent unnecessary work and help identify when the new thresholds actually apply.

Trustee checklist

1

Confirm the financial year end

Is it before 30 September 2026, or on or after that date?

2

Confirm the charity's legal structure

Is it a CIO, charitable company, trust or unincorporated association?

3

Calculate gross income

Do not rely only on cash received into the bank if your accounting basis requires a different calculation.

4

Review gross assets

This is particularly important where income exceeds £500,000 because the alternative audit test may apply.

5

Check the governing document and funding agreements

Look specifically for wording requiring an audit, independent examination or particular accounting basis.

6

Check whether there are subsidiaries

The £1.5 million group accounts threshold may need to be considered.

7

Consider SORP 2026 separately

Determine when the accounting period began and whether SORP 2026 applies.

8

Document the trustees' decision

Keep a clear record in trustee meeting minutes of how the appropriate accounting and scrutiny requirements were determined.

Do the higher thresholds reduce trustees' responsibilities?

No. The higher thresholds simplify certain accounting and external scrutiny requirements, but they do not remove trustees' responsibility for proper financial management. Trustees remain collectively responsible for ensuring appropriate accounting records are maintained and the charity complies with its governing document and reporting obligations.

CIOs, for example, must keep relevant accounting records such as invoices, receipts, cash books and Gift Aid records for at least six years. Reducing external scrutiny should therefore never mean reducing internal financial control.

Clean, well-kept records are the foundation of a smooth year end. If bookkeeping is not your strong point, our charity bookkeeping services can keep everything in order long before the accounts are due, and our charity bookkeeping and records FAQs answer the common questions trustees ask.

From experience: the charities that sail through a year end are almost never the ones with the smallest incomes. They are the ones whose trustees understood which rules applied to them and planned for it early. Getting the question of scrutiny right at the start saves both money and stress.

FAQs

Frequently Asked Questions

Straight answers to the questions trustees ask most about the new charity accounting thresholds.

Need help understanding which charity accounting threshold applies?

The September 2026 changes should reduce unnecessary administration for many charities, but they also create a transition period where trustees need to check year ends, legal structure, income, assets, governing documents and SORP requirements carefully.

At Charity Accountants, we help CIOs, charitable companies, trusts and unincorporated charities prepare annual accounts and understand whether an independent examination or other external scrutiny is required. You can explore our full range of charity accounting services or see the different charity structures we support on our who we help page.

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Important: This article provides general information for charities in England and Wales and should not be treated as advice on the circumstances of a particular charity. Always check your own governing document and seek tailored advice.