New financial thresholds: effective 30 September 2026

Following an extensive consultation by the Department for Culture, Media and Sport (DCMS), a series of substantial increases to financial thresholds in charity law were confirmed in late 2025. These changes aim to ensure that regulation remains proportionate to a charity’s size, effectively ‘resetting’ the framework to account for years of inflationary pressure. DCMS has now confirmed that these changes will come into effect on 30 September 2026.

The changes to accounting and audit requirements will apply to financial years ending on or after 30 September 2026. Other regulatory shifts, such as those governing donation refunds, will apply to all applicable charities from that date.

Perhaps the most impactful change for larger charities is the uplift in audit thresholds. The gross annual income threshold for a full audit will rise from £1 million to £1.5 million. The government estimates this will remove approximately 2,000 charities from the mandatory audit regime, potentially saving the sector millions in professional fees and administrative time.

The asset-based audit threshold is also seeing a significant increase, rising from £3.26 million to £5 million. For charities caught by this asset test, the accompanying income threshold is being doubled from £250,000 to £500,000. Furthermore, the thresholds for preparing and auditing group accounts will align with these new figures, increasing to £1.5 million.

For mid-sized and smaller charities, the changes to independent examination requirements offer substantial deregulation. The basic threshold at which accounts must be independently examined will move from £25,000 to £40,000. This change is expected to generate roughly £7.8 million in annual savings for the 11,000 charities no longer required to seek external scrutiny.

The threshold for professionally qualified independent examiners is increasing from £250,000 to £500,000. This above-inflation increase was specifically chosen to align with the new Charities SORP Tier 1 threshold.

The government is also providing greater flexibility for non-company charities by raising the threshold to prepare receipts and payments accounts from £250,000 to £500,000. This allows more charities to avoid the complexities of full accruals accounting unless they choose otherwise, or their governing document mandates a full audit. To support this transition and ensure data quality, DCMS and the Charity Commission have committed to developing a standardised template for receipts and payments accounts which charities could choose to adopt. This would not only help small charities to prepare their accounts but would also help to ensure the data charities provide to the Charity Commission is consistent and reliable.

Several other thresholds will also be adjusted with effect from 30 September 2026:

• Donation refunds: The threshold above which donors can request refunds in specific circumstances rises from £100 to £150.
• Fundraising remuneration: Thresholds for professional fundraisers and lower-paid collectors will increase from £10/day to £15/day and from £1,000/year to £1,500/year.
• Charity Commission jurisdiction: The income limit for the Commission’s concurrent jurisdiction with the High Court to make certain orders increases from £500 to £1,000.

The charity registration threshold remains at £5,000; the Annual Return requirement stays at £10,000 and the Annual Report threshold continues to be £25,000 to maintain public transparency. However, the uplift in audit and IE thresholds provides an opportunity for many smaller charities to redirect resources toward charitable activities.

For charities preparing accruals-based accounts, finance professionals and trustees must also familiarise themselves with the Charities SORP 2026, which applies to reporting periods that have started on or after 1 January 2026. The new SORP introduces three income-based reporting tiers designed to make accruals accounts more proportionate:

• Tier 1: Income up to £500,000.
• Tier 2: Income between £500,000 and £15 million.
• Tier 3: Income over £15 million.

Key updates in SORP 2026 include new requirements for Trustees’ Annual Reports, for example increased reporting requirements for reserves, impact and sustainability, and changes to lease accounting and income recognition. Our SORP 2026 hub provides free resources to help you understand and navigate these changes.

Charity finance professionals and trustees working with charities in England and Wales should begin assessing how these changes impact their current and future reporting cycles. They should now review their projected income and asset levels for the current financial year. Understanding where a charity sits in relation to these new thresholds will allow trustees to consider their options and may allow charities to take advantage of the reduced administrative burden when the changes take effect.

• Read more about the changes to charity accounting and reporting
• Access the full list of changes to financial thresholds for charities in England and Wales