Charity Reporting is Changing: What the Updated SORP 2026 Means for UK Charities

From 1 January 2026, the charity accounting landscape will evolve once again. The Charity Commission for England and Wales, alongside OSCR and the Charity Commission for Northern Ireland, has been working with the SORP Committee to develop a new version of the Charities Statement of Recommended Practice (SORP), the framework that guides how charities prepare and present their financial statements.

The updated SORP 2026 will apply to financial years beginning on or after 1 January 2026.While the principles of transparency and accountability remain unchanged, the reporting thresholds, bandings, and disclosure expectations are shifting, and every board of trustees should start preparing now.

At Third Sector Experts International, we’ve helped hundreds of UK-registered charities and CICs translate complex regulatory change into practical governance systems. Here’s what you need to know about the forthcoming SORP 2026, and how to ensure your organisation is ready.

What is the SORP and Why It Matters

The Charities SORP sets out how charities must apply accounting standards to ensure financial statements give a true and fair view.

It provides sector-specific interpretation of FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland), ensuring that charity accounts:

·         are transparent and comparable;

·         enable trustees to meet their legal duties; and

·         maintain public confidence in how funds are used.

Every charity preparing accruals-based accounts must follow SORP and from 2026, the rules around who does what level of reporting will change.

Overview of SORP 2026 and the Review Process

SORP 2026 is the outcome of a multi-year consultation by the SORP Committee and the UK accounting bodies. Its aim is to ensure the framework keeps pace with:

• Changes in financial reporting standards (FRS 102 2024 update);Changes in financial reporting standards (FRS 102 2024 update);

• Expectations around digital reporting and data transparency; and

• The diversity of the modern charity sector, from micro-charities to global NGOs.
  

The new SORP will align charity reporting more closely with corporate and public-sector frameworks, while preserving proportionality for smaller organisations. In essence, SORP 2026 introduces updated financial bandings, new disclosure thresholds, and a clearer focus on governance, reserves, and risk.

The New Financial Bandings and Reporting Thresholds

One of the most significant developments is the revision of charity size thresholds, which determine:

• the level of disclosure required;

• whether accounts must be audited or independently examined; and

• what detail appears in the Trustees’ Annual Report.

While final figures will vary slightly across jurisdictions, the banding framework will be:

Charity Size	New SORP 2026 Banding	Key Reporting Requirement
Micro	Income below £100,000	Simplified accrual or receipts & payments accounts; limited narrative
Small	£100,000 – £499,999	Full accrual accounts with simplified disclosures
Medium	£500,000 – £1 million	Full SORP compliance; independent examination required
Large	Above £1 million	Full audit required; expanded narrative on governance, risk & reserves

(Note: thresholds confirmed in 2025 SORP final guidance.)

This tiered structure is designed to reduce administrative burden for smaller charities while increasing transparency for larger ones.

What the Changes Mean for Your Charity

The new SORP is not just a technical update; it’s a cultural shift in accountability.

Small Charities (under £500k):

• Will benefit from simplified notes and disclosures.

• May no longer need to report some low-risk transactions in detail.

• Will still need to clearly demonstrate public benefit and impact.
  

Medium Charities (£500k–£1m):

• Will need to strengthen financial controls and risk registers.

• Expected to provide more information on reserves and governance.
  

Large Charities (over £1m):

• Must prepare audited accounts with expanded disclosure on trustee remuneration, related-party transactions and fund management.

• Will need to link impact statements directly to financial performance.
  

These changes encourage proportionality, but also professionalisation. Trustees can no longer view finance as administration; it is now part of governance and strategic leadership.

Transparency, Governance and Audit Expectations

SORP 2026 reinforces the link between financial reporting and good governance.

Key themes include:

·         Clear disclosure of trustee decision-making on reserves and risk.

·         Transparent reporting on fundraising costs and donor restrictions.

·         Narrative on how financial resources align with strategic objectives.

·         More focus on impact measurement within the annual report.

The Charity Commission will expect trustees to demonstrate understanding of their charity’s financial position, not just approve the accounts. Third Sector Experts International often supports boards through Finance & Governance Reviews, ensuring trustees can interpret and question financial data with confidence.

Implications for International Charities

For charities operating abroad or through subsidiaries, SORP 2026 clarifies the expectation of group consolidation and cross-border transparency.

• Overseas branches and partners must submit timely financial information for consolidated reporting.

• Exchange-rate management and restricted fund tracking will be under greater scrutiny.

• Charities must evidence oversight of international spending and safeguarding risks within their annual reports.
  

For CICs, while SORP does not formally apply, many funders will expect SORP-aligned financial statements to demonstrate transparency and credibility.

Preparing for Transition

Transition to SORP 2026 will require planning, not panic.

Practical steps trustees should take now:

·         Review your charity’s financial banding and forecast where you will sit under the new thresholds.

·         Update your financial policies (income recognition, fund allocation, reserves).

·         Review systems and software to ensure compatibility with new reporting requirements.

·         Train trustees and finance staff on SORP changes and responsibilities.

·         Engage auditors early to discuss new disclosure expectations and audit timelines.

Third Sector Experts International recommends conducting a SORP Readiness Audit before year-end 2025 to identify gaps and build a transition plan.

Communicating Change to Stakeholders

Transparency isn’t just about compliance; it’s about communication.

As bandings shift, some charities may appear “larger” or “smaller” on paper. Trustees should communicate these changes clearly to:

• Donors and funders, to maintain confidence.

• Staff and volunteers, to reinforce trust and accountability.

• Beneficiaries, to demonstrate continued stewardship of resources.
  

Updating your annual report narrative to explain the transition and your commitment to transparency will build credibility with all stakeholders.

Opportunity Through Compliance

While some trustees see SORP updates as burdensome, the truth is that compliance creates opportunity.

Charities that embrace the change can:

·         Enhance funder confidence through clearer data.

·         Benchmark more accurately against sector peers.

·         Improve governance discipline and risk awareness.

·         Tell a more compelling impact story through integrated reporting.

SORP 2026 isn’t just about reporting numbers; it’s about building trust through transparency.

How Third Sector Experts International Can Help

At Third Sector Experts International, we help charities turn regulatory change into a strategic advantage through:

·         SORP Readiness Audits and Financial Health Checks

·         Trustee Training on Financial Oversight and SORP Responsibilities

·         Governance and Reporting Framework Development

·         International Financial Controls and Risk Management

·         Charity Commission Compliance Support

Our goal is to make compliance not a burden, but a platform for confidence, growth, and credibility.

Final Thoughts

The SORP 2026 changes represent an evolution, not a revolution, in charity reporting.

Charities that plan ahead, invest in training, and embed financial transparency into their culture will navigate the transition smoothly.

As we tell our clients at Third Sector Experts International:

“Good reporting isn’t just about compliance, it’s about confidence.”

With the right preparation, SORP 2026 can strengthen not only your financial reporting but also the public trust that sustains your mission.

Download our SORP 2026 Readiness Checklist:

SORP 2026 Readiness Checklist.pdf

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