The answer depends on your charity's income and where it is registered. Here is everything you need to know about when independent examination becomes a legal obligation.
Yes, independent examination is a legal requirement for many UK charities. However, it is not required for every charity. The law sets specific income thresholds, and whether you need an examination depends on how much money your charity receives each year and which regulator supervises your charity.
Smaller charities with income under £25,000 generally do not need any external financial check. But once your charity crosses certain thresholds, the law requires you to have either an independent examination or, for larger charities, a full audit.
The Charities Act 2011 and Charity Commission guidance set out the following requirements:
No external check is required by law. Your charity must still prepare annual accounts, but no independent examination or audit is mandated.
Independent examination is required by law. This is a statutory requirement under the Charities Act. Your charity must have an independent examiner check your accounts and produce a report.
Full audit is required. An independent examination is not sufficient. Your charity must have a statutory audit by a registered auditor.
Full audit is required regardless of income. The asset threshold can trigger audit requirements even for charities with income below £1 million.
The Charities and Trustee Investment (Scotland) Act 2005 sets different thresholds for Scottish charities:
No external check required by law. Accounts still need to be prepared and submitted to OSCR.
Independent examination is required by law. This applies to all charities registered with OSCR in this income bracket.
Full audit is mandatory. OSCR requires charities above this threshold to have their accounts audited by a registered auditor.
The Charity Commission for Northern Ireland follows similar rules to England and Wales:
No external check required.
Independent examination is required by law.
Full audit is required.
Some charities have different requirements regardless of their income level:
If your charity is registered at Companies House, the Companies Act requirements may apply. This can affect audit thresholds and filing obligations.
Some charities, such as certain church charities, are excepted from registering with the Charity Commission. These may have different requirements.
Certain charities, like some educational institutions, are exempt from Charity Commission supervision. They may be regulated by other bodies with different requirements.
Your charity's constitution or trust deed might require an audit or independent examination even if the law does not. Always check your governing document.
Failing to arrange an independent examination when legally required is a serious matter:
The Charity Commission can take formal regulatory action, including contacting trustees directly.
Your charity will be flagged on the Charity Commission public register as having overdue accounts.
Trustees can be held personally responsible for governance failures.
Failing to comply can affect your charity's reputation with donors and funders.
UK charity law can be confusing. Our specialist charity accountants can help you understand exactly what is required for your charity.