The new Charities SORP 2026 applies to accounting periods beginning on or after 1 January 2026. It introduces the most significant changes to charity financial reporting in several years.
With the introduction of the new SORP, charities will need to review several aspects of their financial reporting and governance processes. The GAVS Community Accountant, Vindhya Viswanathan, has outlined some of the most significant changes and the practical considerations for charities as they prepare for implementation.
1. New Three-Tier Reporting Structure
Charities are now grouped into three reporting tiers based on gross income. The new structure introduces a more proportionate approach to reporting, with additional requirements applying as a charity’s income increases. Find out more here.
2. Updated Income Recognition Rules
The new SORP aligns charity accounting with the revised FRS 102 standard, introducing updated guidance on recognising income from contracts, grants and other funding arrangements. Charities should review existing accounting policies to ensure compliance. Find out more here.
3. Lease Accounting Changes
Many leases that were previously treated as operating leases will now need to appear on the balance sheet. Charities with office, vehicle or equipment leases should assess the financial reporting impact before year-end. Find out more here.
4. Enhanced Trustees’ Annual Report
The revised SORP places greater emphasis on transparency and the information provided to stakeholders. Trustees should consider how their annual report clearly communicates the charity’s activities, achievements and financial position.
Depending on the charity’s reporting tier, trustees may need to provide more detailed information relating to:
Larger charities will generally have additional reporting requirements as they move through the tiers. Find out more here.
For charities that are unfamiliar with FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland provides the underlying accounting framework for the SORP. Find out more here.
Finance Action Checklist
This month, finance teams should:
ü Confirm which SORP reporting tier applies to your charity.
ü Review accounting policies for income recognition.
ü Identify all lease agreements that may require balance sheet recognition.
ü Review existing financial records and accounting processes.
ü Brief trustees on the new reporting requirements.
The Greenwich Community Accountancy Programme provides tailored free one-to-one support to help voluntary sector organisations strengthen their financial capacity and resilience. Support can include Financial planning, Budgeting, Recording financial transaction, Independent examination of accounts, Financial reporting and practical templates tailored to your organisation’s needs. Find out more here
Alternatively, you can contact the GAVS Community Accountant, Vindhya Viswanathan, at [email protected].