The new Charity SORP has been published and, while accounting standards don’t usually make the most exciting headlines, these changes are worth paying attention to if you’re involved in running a charity.
The updates apply to charities that prepare accruals accounts, which is compulsory if your income is over £250,000 or you’re a charitable company. They come into effect for financial years starting on or after 1 January 2026, so they’ll likely apply to your 2026/27 accounts.
Here’s a quick breakdown of what’s changing and why it matters.
First, what is the SORP?
SORP stands for Statement of Recommended Practice, and it gives charities guidance on how to prepare their accounts and reports. It helps ensure consistency, transparency and that key information is shared in the right way.
This new version updates the SORP in line with recent changes to general accounting standards and brings in some extra clarity for charities.
What are the main changes?
Income recognition will be more detailed
The way you record income is getting an update. The new SORP asks charities to look at whether income is tied to specific performance obligations. This is especially important for charities that receive grants or deliver services under contract.
This could mean some income is recognised later than it would be now, depending on how and when it’s earned.
Donated goods and services will need to be recorded more clearly
If your charity receives gifts in kind like donated equipment or volunteer support, the SORP now includes more guidance on how to value and report these. You’ll need to make sure you’re capturing this properly in your records.
Trustees’ reports will need a bit more detail
The SORP now asks for extra information in your annual report, including:
- How your charity delivers public benefit
- A summary of key risks and uncertainties
- A clearer overview of activities and achievements
This is to help supporters and the public better understand what the charity does and how it’s doing.
More guidance on reserves and financial risks
Charities are being encouraged to say more about how they assess going concern and manage reserves. This means explaining how you stay financially secure and what steps are in place to deal with any future challenges.
Costs categories are being clarified
If you’ve ever found it confusing to split out support costs or governance costs, you’re not alone. The new SORP offers more guidance on how to break these down so your financial reporting is clearer.
When do the changes apply?
If your charity’s financial year starts on or after 1 January 2026, you’ll need to follow the new SORP for that year. That gives you time to get up to speed, review your current approach and make any changes needed.
What should charities do now?
Here are a few simple steps you can take:
- Review how you recognise income and whether changes will be needed
- Look at how you record gifts in kind and volunteer time
- Think about the information you include in your trustees’ report
- Speak to your accountant or independent examiner if you’re unsure
How We Can Help
We’re already working through the new guidance and helping our charity clients prepare. Whether you’re writing your first trustees’ report or just want to double-check your income recognition policy, we’re here to support you.
We’ll also be sharing more resources and updates in the run-up to the changes coming into effect, so stay tuned for practical tips to help you stay ahead.
If you’d like us to look at how the new SORP might affect your charity, just get in touch.
