Independent examination is required for most UK charities above a certain income threshold. The exact requirements depend on where your charity is registered and how much money it brings in each year.
In the UK, an independent examination becomes a legal requirement when your charity's annual income exceeds a certain threshold. The rule is straightforward: if your charity earns £25,000 or more, you will need either an independent examination or a full audit, depending on your income level and where your charity is registered.
Below that threshold, smaller charities generally do not need any external financial check, though they still need to prepare annual accounts.
The Charity Commission for England and Wales sets the following requirements:
No independent examination or audit is required. Your charity must still prepare annual accounts, but these do not need to be externally checked. CIOs must still file accounts with the Charity Commission.
Independent examination is required by law. The person carrying out the examination must be independent of your charity and should have relevant qualifications or experience, unless your charity is excepted.
A full audit is required. This is a statutory requirement, meaning your charity must have a registered auditor carry out the audit.
Some charities with income between £25,000 and £1 million can claim exemption from a full audit if they meet certain criteria. These charities will still need an independent examination. For example, charities with income under £250,000 that are not companies may qualify for audit exemption.
The Office of the Scottish Charity Regulator (OSCR) has its own thresholds:
No independent examination or audit is required. However, you must still prepare annual accounts and submit them to OSCR.
Independent examination is required by law. This applies to all charities in this income bracket in Scotland.
A full audit is mandatory. OSCR requires charities above this threshold to have their accounts audited by a registered auditor.
Charities with income between £25,000 and £500,000 can apply for exemption from audit if they meet specific conditions, but they will still require an independent examination.
The Charity Commission for Northern Ireland (CCNI) applies similar thresholds to England and Wales:
No independent examination or audit required. Accounts still need to be prepared and filed with CCNI.
Independent examination is required. The examiner must be independent and suitably qualified.
Full audit is required. This is mandatory for larger charities in Northern Ireland.
When working out whether your charity has reached the threshold, you need to include all incoming resources. This generally means:
You should calculate your income on an accruals basis if you use accruals accounting, meaning you include income owed to you even if you have not yet received it. If you use receipts and payments accounting, you count money actually received in the financial year.
Some charities have different rules or may qualify for exemptions:
If your charity is also a company registered at Companies House, different rules may apply. You will need to file accounts with both Companies House and the Charity Commission, and the Companies Act requirements may affect your audit threshold.
CIOs must file accounts with the Charity Commission regardless of income level, even if income is under £25,000.
Some charities are excepted from registering with the Charity Commission, such as certain church charities. These may have different requirements and should check with their regulator.
Certain charities, including some educational institutions and housing associations, are exempt from Charity Commission supervision. They may be regulated by other bodies and have different requirements.
You should arrange your independent examination well before your filing deadline. Here is a typical timeline:
Most charities must file their accounts and independent examiner's report within 10 months of their financial year end. Failing to meet this deadline can result in your charity being flagged on the public register.
Failing to arrange an independent examination when required is a serious matter:
If you are unsure whether your charity needs an independent examination, it is always best to seek advice from a specialist charity accountant.
| Income | England and Wales | Scotland | Northern Ireland |
|---|---|---|---|
| Under £25,000 | No check required | No check required | No check required |
| £25,000 to £500,000 | Independent examination | Independent examination | Independent examination |
| £500,001 to £1 million | Independent examination | Audit required | Independent examination |
| Over £1 million | Audit required | Audit required | Audit required |
Note: Some charities may qualify for audit exemption. Always check with your regulator for the most current requirements.
UK charity accounting rules can be confusing, especially if your charity operates across different regions. Specialist charity accountants can help you understand exactly what is required.