The Department for Culture, Media and Sport has confirmed a 50% increase to the charity audit threshold in England and Wales, lifting it from £1.0m to £1.5m. The package of reporting changes, published alongside updates to the Charities SORP, is aimed at reducing unnecessary compliance costs for smaller charities whilst keeping public trust intact.
As well as raising the audit threshold, ministers will increase the level at which charities must be independently examined from £25,000 to £40,000. DCMS says the set of threshold changes will collectively save the sector about £47m a year, giving smaller organisations more time and resource to focus on frontline work rather than paperwork. The department intends to bring the new thresholds into force on 1 October 2026 to give NonProfits time to prepare.
The government has also rebalanced other reporting requirements to align with the updated SORP tiers. For example, the threshold for producing accrual accounts will rise from £250,000 to £500,000, matching the top of the lowest SORP tier. DCMS and the Charity Commission will work together to develop a standardised format for receipts and payments accounts and to support the digitalisation of charity reporting, which should make compliance simpler over time.
Leading NonProfit sector bodies have broadly welcomed the move.
Richard Sagar, head of policy at the Charity Finance Group, said the change recognises that previous thresholds no longer matched the realities charities face and will reduce burdens on organisations that are already delivering vital services. At the same time the regulators plan to review guidance on independent examination and explore further deregulatory opportunities raised during the consultation.
For many small and medium charities the changes are likely to reduce audit costs and free capacity for service delivery and fundraising. Trustees should still keep robust oversight of finances, because the need for clear accounts and good governance does not change. Organisations that currently sit near the old thresholds should model the impact on costs and staffing so they can plan for the October 2026 implementation.
So what should you do next?
Review your current reporting tier and forecast whether the new thresholds will change your audit or independent examination requirements. Talk to your finance and governance advisers about moving to a receipts and payments format if that is now appropriate, and factor in any digital reporting work you may need to do.
Where possible, use the extra capacity to invest in reserves, staff development or systems that make reporting easier in future.
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