Independent examination new rules from 30 September 2026 being reviewed by charity accountants checking UK charity accounts and examiner qualifications
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Independent Examination New Rules from 30 September 2026: What Trustees Need to Know

The independent examination new rules from 30 September 2026 raise the basic threshold from £25,000 to over £40,000 and the professionally qualified examiner threshold from £250,000 to over £500,000. Here is exactly what changes, and what it still means for your charity.

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

Independent examination new rules from 30 September 2026 significantly change when charities in England and Wales need external scrutiny, and when their independent examiner must hold a recognised professional qualification.

For financial years ending on or after 30 September 2026, the basic independent examination threshold increases from £25,000 to over £40,000 of gross income. The threshold requiring a professionally qualified independent examiner increases from £250,000 to over £500,000.

These changes should reduce compliance costs for many smaller charities, but trustees still need to check their governing document, funding agreements, charity structure, income and assets before deciding that an examination or audit is no longer required. In practice, we see most problems arise when trustees rely on turnover alone and forget what their own constitution or a grant agreement actually says.

Key Takeaways

  • A charity with gross income of £40,000 or less will normally not need an independent examination or audit under charity law.
  • A charity with gross income over £40,000 will normally require an independent examination or audit.
  • Where gross income is over £500,000, an independent examination must be carried out by a member of a professional body specified under the Charities Act 2011.
  • The main statutory audit threshold increases to gross income over £1.5 million.
  • An audit can also be required where gross income is over £500,000 and gross assets exceed £5 million.
  • CIOs and unincorporated charities with income of £500,000 or less may generally choose receipts and payments accounts, subject to their governing document.
  • A governing document or funding agreement can still require an examination or audit even where the statutory threshold does not.
  • The changes apply to financial years ending on or after 30 September 2026, not simply accounts prepared after that date.

What are the new independent examination rules from 30 September 2026?

The independent examination new rules from 30 September 2026 increase the statutory income threshold from over £25,000 to over £40,000. They also raise the point at which a professionally qualified independent examiner is compulsory from over £250,000 to over £500,000 of annual gross income.

The main changes are summarised below. We always suggest trustees print this table and place it next to their year end file, because the interaction between income, assets and year end date is where most confusion starts.

Requirement Before 30 September 2026 Financial years ending on or after 30 September 2026
No external scrutiny normally required £25,000 or less £40,000 or less
Independent examination normally required Over £25,000 Over £40,000
Professionally qualified examiner required Over £250,000 Over £500,000
Main audit threshold Over £1 million 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

Official guidance

Trustees can compare the official figures directly with the regulator:

Charity Commission: threshold changes at a glance

When do the new independent examination thresholds apply?

The new thresholds apply to financial years ending on or after 30 September 2026. Trustees should look at the charity's actual accounting year end rather than the date on which the accounts are prepared, approved or filed with the Charity Commission.

This distinction matters enormously for charities whose accounts are being prepared around the transition date. A charity with a 30 September 2026 year end falls inside the new regime. One with a 29 September 2026 year end does not. That single day can change whether an examination is needed at all.

Charity financial year end Threshold rules
31 August 2026 Previous thresholds
29 September 2026 Previous thresholds
30 September 2026 New thresholds
31 December 2026 New thresholds
31 March 2027 New thresholds

Does a charity with income under £40,000 need an independent examination?

A charity with gross income of £40,000 or less will not normally require an independent examination or statutory audit for a financial year ending on or after 30 September 2026. However, trustees must still check their governing document and funding arrangements before deciding that external scrutiny is unnecessary.

In our own experience with small charities, this is the point that causes the most difficulty. Trustees celebrate the higher threshold, tell the examiner they are no longer needed, and then discover that a grant agreement signed three years ago still requires examined accounts. The statutory exemption does not, and cannot, override a contractual promise the charity has already made.

An independent examination could still be required because:

  • the charity's constitution or trust deed requires one
  • the charitable company's articles require external scrutiny
  • a grant provider requires independently examined accounts
  • a lender or major funder requires external scrutiny
  • the Charity Commission specifically requires scrutiny

£40,000 should not be treated as an automatic exemption in every situation.

Related reading

Does a charity with income between £40,000 and £500,000 need an independent examination?

Yes, in most cases. Where gross income is over £40,000 but not more than £500,000, an independent examination will normally be required unless the charity has an audit instead, or another legal requirement changes the position.

The important change is that the examiner does not automatically need to hold one of the specified professional qualifications solely because of the charity's income. However, that does not mean anyone can carry out the examination.

The examiner must still be:

  • independent from the charity
  • competent to undertake the work
  • sufficiently experienced for the size and complexity of the charity
  • able to understand the charity's accounts and records
  • free from conflicts that could affect impartiality

The Charity Commission's CC32 guidance makes clear that an examiner must not be influenced by close relationships with trustees or by involvement in the charity's day to day financial administration.

When must the independent examiner be professionally qualified?

For financial years ending on or after 30 September 2026, a charity with gross income over £500,000 that chooses an independent examination rather than an audit must use an examiner who is a member of a professional body specified under section 145 of the Charities Act 2011.

Recognised memberships include, among others:

ACCA
ICAEW
ICAS
Chartered Accountants Ireland
AAT
CIMA
CIPFA
IFA
Association of International Accountants
Fellows of the Association of Charity Independent Examiners

Trustees should verify the examiner's current professional membership before appointment. We regularly see examiners quoted on the strength of a lapsed membership, so it is worth checking directly with the body rather than relying on a letterhead.

A qualification alone is not enough. The examiner must also have appropriate charity accounting experience and remain genuinely independent.

Related reading

Who cannot act as a charity's independent examiner?

An independent examiner should not carry out the examination where a relationship or involvement could reasonably affect, or appear to affect, their objectivity. The Charity Commission specifically identifies concerns around people who are involved in the charity's day to day administration or have close relationships with trustees.

Examples can include:

a trustee
the charity's bookkeeper
an employee involved in the accounts
a person closely connected to the trustees
a major donor in circumstances affecting independence
someone with a significant financial relationship with the charity

An examiner cannot independently examine their own bookkeeping work. In our experience, this is the most common independence problem within small charities, usually because the person who keeps the records is also the only qualified person available.

If trustees are uncertain about independence, the Charity Commission recommends asking the proposed examiner to explain in writing why they believe the independence requirements are satisfied.

Independence in practice

The Commission's guidance on independence is detailed, and it is worth reading before you appoint anyone.

CC32 Independent examination of charity accounts

Independent examination vs audit: what changes from September 2026?

An independent examination remains a less extensive form of external scrutiny than a statutory audit. From 30 September 2026, more charities may qualify for independent examination because the main statutory charity audit threshold rises from over £1 million to over £1.5 million of gross income.

Independent examination Statutory audit
Less extensive external scrutiny More extensive examination
Usually lower cost Generally higher professional cost
Normally available above £40,000 and within audit thresholds Required when statutory audit tests are exceeded
Examiner considers records and accounts Auditor provides an audit opinion
Qualified examiner mandatory above £500,000 Registered auditor required
Charity Commission independent examination rules apply Auditing standards and statutory rules apply

An audit will normally be required where:

Gross income exceeds £1.5 million
or
Gross income exceeds £500,000 and gross assets exceed £5 million

Charitable companies should also check whether the Companies Act 2006 creates a separate audit requirement. Company law and charity law run alongside each other, and the higher of the two thresholds applies in practice.

Can a charity move from audit to independent examination?

Potentially, yes. A charity with income between £1 million and £1.5 million may fall outside the new statutory charity audit threshold for a financial year ending on or after 30 September 2026 and may therefore be eligible for independent examination instead.

The Charity Commission gives an example of a charitable company expecting gross income of £1.4 million for a year ending after the threshold change. Subject to other requirements, the trustees can choose a professionally qualified independent examiner rather than a statutory audit.

However, trustees should first check:

  1. 1 The charity's governing document
  2. 2 Any grant or funding agreements
  3. 3 Any lender requirements
  4. 4 Companies Act audit requirements for charitable companies
  5. 5 Whether the charity is part of a group
  6. 6 Whether there is another regulatory requirement for audit

Cost savings alone should not determine the decision. Some charities may voluntarily retain an audit because major funders, stakeholders or trustees value the additional level of assurance, and that is a perfectly legitimate choice.

Related reading

How do the new rules affect receipts and payments accounts?

For financial years ending on or after 30 September 2026, CIOs, trusts and unincorporated associations with gross income of £500,000 or less may generally choose receipts and payments accounts instead of accruals accounts, unless their governing document requires accruals accounting or the trustees choose accruals accounts.

This is important because the previous threshold was £250,000. A charity with income of £350,000, for example, might therefore have three separate changes to consider at once:

It may use receipts and payments accounts if its structure permits

It still needs an independent examination because its income exceeds £40,000

Its examiner no longer needs to be professionally qualified solely because income exceeds £250,000

Charitable companies cannot use receipts and payments accounting simply because they fall below £500,000. Company accounting requirements continue to apply regardless of the charity thresholds.

Does SORP 2026 change the independent examination threshold?

No. SORP 2026 and the September 2026 threshold changes are related to charity reporting but have different commencement tests. SORP 2026 applies to accounting periods starting on or after 1 January 2026, while the new statutory accounting and scrutiny thresholds apply to financial years ending on or after 30 September 2026.

Trustees should therefore consider both dates independently. A charity with an accounting period from 1 October 2025 to 30 September 2026 falls within the new September threshold regime because the year ends on 30 September 2026. The SORP position is considered separately because the accounting period began before 1 January 2026.

Official SORP reference

The Charities SORP is published and maintained by the SORP-making body.

Charities SORP official site
Accountants for CIOs Accountants for Charitable Trusts Accountants for Unincorporated Associations

What should trustees do before appointing an independent examiner?

Trustees should establish the charity's legal requirements before appointing an examiner. The correct decision depends not only on turnover, but also on the financial year end, assets, legal structure, governing document and funding arrangements.

1

What is our financial year end?

Confirm whether it ends before or on or after 30 September 2026.

2

What is our gross income?

Use the correct charity accounting definition rather than simply looking at money entering the bank.

3

Do we exceed an audit threshold?

Check both gross income and gross assets.

4

What does our governing document say?

Look for references to independent examination, audit, qualified accountants or external scrutiny.

5

Do funders require an audit or examination?

Review grant agreements before changing existing arrangements.

6

Does our examiner need a professional qualification?

If gross income exceeds £500,000 and independent examination is permitted, use an examiner from a recognised professional body.

7

Is the proposed examiner genuinely independent?

Check financial, personal and operational relationships.

8

Does the examiner understand charity accounting?

Restricted funds, Gift Aid, grants, designated funds and SORP reporting can make charity accounts more complex than ordinary business accounts.

9

Have trustees documented the decision?

Record the decision in trustee meeting minutes and agree the appointment and scope clearly.

What records should trustees prepare for an independent examination?

A well organised year end usually makes an independent examination faster and reduces questions from the examiner. Trustees should normally have available:

Approved annual accounts
Complete bookkeeping records
Bank statements
Bank reconciliations
Invoices and receipts
Donation records
Gift Aid records
Grant agreements
Restricted fund records
Payroll information
Trustee expense records
Related party transactions
Fixed asset information
Trustee meeting minutes
The Trustees' Annual Report
Supporting schedules for significant balances

The examiner may request additional evidence depending on the charity's circumstances.

Related reading

Do charities still need to prepare accounts below £40,000?

Yes. The increase in the independent examination threshold does not mean charities with income of £40,000 or less can stop preparing accounts. All charities must prepare appropriate accounts and maintain adequate financial records, and registered charities must also prepare a Trustees' Annual Report.

The change relates to external scrutiny, not the underlying duty to account properly for charitable funds. This distinction is essential for trustees, and it is one we explain to almost every small charity we work with.

Remember: no scrutiny does not mean no bookkeeping. Good records are what protect trustees if the Charity Commission ever asks a question.

Do the new rules change Charity Commission filing requirements?

Not all filing thresholds are changing. The Charity Commission's September 2026 table confirms that the threshold for registered charities to submit an annual return remains income over £10,000, while the threshold for sending accounts and the Trustees' Annual Report to the Commission remains income over £25,000.

A charity with £35,000 income could therefore:

no longer require statutory independent examination under the new threshold
still have Charity Commission reporting and filing responsibilities
Annual return to the Charity Commission Submission support and deadline management Trustees' annual report requirements What small charities must report

Frequently Asked Questions

Prepare for the new independent examination rules now

The independent examination new rules from 30 September 2026 should reduce unnecessary compliance work for many small and medium sized charities. But income is only part of the decision. Trustees should also consider gross assets, their governing document, funding agreements, legal structure, group arrangements and any separate Companies Act requirements.

£40,000

The new statutory external scrutiny threshold

£500,000

The threshold at which a qualified examiner becomes mandatory

£1.5 million

The new main statutory charity audit threshold

We support CIOs, charitable companies, charitable trusts and unincorporated associations with annual accounts and independent examination requirements. If your charity has a financial year ending on or after 30 September 2026 and you are unsure whether you need an independent examination or audit, speak to our charity accounting team before appointing an examiner or auditor.

Book a Free Consultation Independent Examination Services

This article is general guidance for charity trustees and is not a substitute for professional advice on your charity's specific circumstances.