Charities are you ready for tiered reporting? (SORP 2026)

Please note: This blog is based on the SORP 2026 exposure draft published in March 2025. The final version of the SORP is subject to consultation and may have changes to the draft positions outlined below.

The ‘Statement of Recommended Practice: Accounting and Reporting by Charities’ (‘the SORP’) ensures consistency and transparency across the sector, making charity accounts comparable, understandable and useful for donors, beneficiaries, and the public alike.   It has been updated following an extensive development process informed by the views of engagement partners and a sector specific SORP Committee.

The SORP making body is now inviting comments on the draft, as the feedback will help shape the final version which is expected to be published in autumn 2025 and effective from January 2026.

What are the proposed changes?

The long awaited exposure draft SORP for 2026 has arrived and with it comes a major change in the structure of how charities report in their accounts.  Although in the past the Charity Commission has made some room for differences in the way it treated its definition of small and large charities, it has now proposed a three tier structure with some clear reporting guidelines for each.

The three tiers are as follows:

• Tier 1 - charities applying accruals accounting, with gross income of up to £500,000.
• Tier 2 - charities with income of between £500,000 and £15m.
• Tier 3 - charities with income above £15m.

These new tier thresholds are designed to align more closely with the new reporting standards for small, medium and large size companies that were updated for periods commencing on or after 6 April 2025.

Some of these changes mean welcome respite from the need for smaller charities to prepare cashflow statements. However, care should be taken to ensure all the other provisions relating to size within the Companies Act thresholds such as number of employees are considered as other size limits for companies might still be breached. Paragraph 35 on page 18 of the exposure draft notes this clearly.

How will it affect my charity?

The majority of the tiered requirements affect the trustees’ report module. For example, there are new sustainability requirements in the trustees’ report, for tier 1 and 2 charities.  For larger tier 3 charities, there are significant points around key performance indicators, governance and social policies as well as board diversity.  This could mean significant extra reporting for many organisations.

Other key changes in the report include plans for future periods. This section is often a short summary in the reports of many charities, but tiers 2 and 3 will now require additional commentary from the trustees’ perspective on future direction of the charity, how decisions are made and resources allocated.

In the main disclosure notes, there are new options to use ‘natural’ or ‘activity’ based reporting classifications in section 4, while section 9 offers tier 1 charities some changes in employee disclosures if using the natural basis.

Many heavily redrafted sections such as income in section 5, still apply to all tiers of charity. There is a useful table in section 1.11 of the exposure draft for the application of many trustees’ report requirements across the tiers.

If you have any questions or queries regarding the proposed changes and how they may affect your charity, please get in touch with your Swindells partner who will be able to advise you further.