The Charities Commission released SORP 2026 at the end of October which will take effect for accounting periods starting or after 1 January 2026.

The SORP is relevant to those charities that prepare accruals accounts. It is not relevant for charities who prepare cash-based Receipts and Payments accounts.

Key changes include a three-tier reporting regime and changes to lease accounting and income recognition.

1. Three-tier reporting

The reporting requirements of charities will depend on which tier the charity is classified. The higher the tier, the increased disclosure and presentation requirements:

Tier 1 – for charities with annual gross income up to £500,000

Tier 2 – for charities with annual gross income between £500,001 and £15,000,000

Tier 3 – for charities with annual gross income above £15,000,000.

For example, only Tier 3 charities, plus those Tier 1 and Tier 2 who do not qualify as ‘small entities’ under FRS 102, will be required to prepare a cash flow statement.

However, all charities must link the narrative report to the financial statements, reconcile reserves figures to the accounts, report on volunteers’ activities and explain the charity’s plans for the future. In addition, larger charities will be required to discuss environmental, social and governance matters.

Further details are available at: summary-of-changes-sorp-2026-pdf

Please note that these tiers are different to the recently announced changes to accounts examinations, which are effective for accounting periods that end or after 30 September 2026.

2. Lease accounting

The SORP adopts the latest requirements of FRS 102 on lease accounting and will require charities to account for most operating leases on the balance sheet. As a result, charities with leased assets will see an increase in assets and liabilities in the balance sheet. There will also be changes in the amount and the timing of when charges are made to the statement of financial activities.

3. Revenue recognition

The SORP adopts the latest requirements of FRS 102 on revenue recognition and adopts a five-step model for recognising revenue. This might mean that charities may need to recognise revenue differently under the new SORP.

A full copy of the SORP is available at: charities-sorp-2026-1

posted 4 December 2025