For a lot of the smaller charities and cultural organisations we work with, the words "audit season" land somewhere between a groan and a real worry about the bill. So here is some welcome news. The rules for charity accounts in England and Wales have changed, and for many charities the requirements are now lighter. The catch, and there is always a catch, is that lighter does not always mean better for your particular charity, and the timing of when the changes apply is easy to get wrong.
The refresh comes in two parts. The income thresholds that decide how your accounts must be scrutinised have gone up, and they apply to financial years ending on or after 30 September 2026. Alongside them, a new accounting standard, SORP 2026, is already in force for accounting periods that began on or after 1 January 2026, though it only affects charities that prepare the more detailed "accruals" accounts.
The income thresholds have moved across the board. The point at which a charity must have an independent examination has risen from £25,000 to £40,000 of income. The point at which a full audit is required on income alone has moved from £1m to £1.5m. And a charity now only has to prepare accruals accounts, rather than simpler receipts and payments accounts, once its income passes £500,000, up from £250,000 (charitable companies aside, as they still follow company law).
The middle band is where the money is. A charity with income between £1m and £1.5m that used to need a full audit can now usually choose an independent examination instead: a narrower, lighter and considerably cheaper check. The lighter option comes with conditions, though. An audit is still compulsory if your income is above £500,000 and your gross assets are over £5m. And once income is above £500,000 and you are choosing examination, your examiner must be professionally qualified, so it pays to line one up early.
For a small charity or a volunteer-run arts organisation, the difference between an audit and an independent examination can be several thousand pounds and a good deal of trustee time. Moving into a lighter regime frees up money that can go back into the work. But the decision is not automatic, and it is not only about cost. Your funders may still expect an audit. Your governing document may require one whatever the law says. And receipts and payments accounts, while simpler, may not tell your board or your donors enough about reserves and restricted funds. The lighter option is worth having; it is not always the right one.
Start by confirming your year-end date and working out which change bites when. A charity with a 30 September year end is affected straight away; one with a 31 March year end first uses the new figures for the year ending 31 March 2027. Then read your governing document and your main funding agreements before you change anything. If your constitution forces an audit you no longer need, you can consider amending it (the Commission's CC36 guidance explains how), but that is a decision to take with your eyes open rather than a box to tick because a threshold moved.
A few things have not changed, and they still apply. You register once income reaches £5,000, you file an annual return each year, and you keep proper records and prepare a trustees' annual report. The basics stay.
We have pulled all of this together into a short plain-English guide you can download and share with your board. It sets the new thresholds side by side with the old ones, explains what an independent examination actually involves, and gives trustees a short checklist for the next meeting. If you would like us to look at how the changes apply to your charity, or to sense-check a move to a lighter regime, do get in touch.
