The Charities SORP 2026

On 31 October 2025, the Charities SORP-making body released the long-awaited Charities Statement of Recommended Practice (SORP) 2026, marking a significant evolution in charity financial reporting. This new framework will apply to accounting periods beginning on or after 1 January 2026, replacing the current SORP 2019. For charities across the UK, this update brings both opportunities and challenges, as it aims to improve transparency, simplify reporting, and align more closely with the revised FRS 102 accounting standard.

At Price Bailey, we’ve been closely following the development of the new SORP and are committed to helping our charity clients navigate the changes with confidence.

Key Features of the 2026 SORP

Tiered Reporting Structure

One of the most notable changes is the introduction of a three-tier reporting framework, designed to make financial reporting more proportionate to a charity’s size:

• Tier 1: Charities with gross income up to £500,000
• Tier 2: Income between £500,000 and £15 million
• Tier 3: Income over £15 million

This structure aims to reduce the reporting burden on smaller charities while ensuring larger organisations maintain robust transparency. Although some stakeholders proposed a “two-year rule” to prevent tier changes due to one-off income spikes, this was not adopted to maintain simplicity.

Enhanced Trustees’ Annual Report Requirements

The Trustees’ Annual Report will now require mandatory impact reporting for all charities, alongside expanded disclosures on environmental, social, and governance (ESG) matters. This reflects growing public and donor interest in how charities operate beyond financial metrics. There are also key changes related to disclosure around volunteers and legacies to consider for the larger tiers.

Income Recognition and Lease Accounting

SORP 2026 introduces clearer guidance on income recognition, particularly distinguishing between exchange and non-exchange transactions. This is a critical update for charities receiving grants, contracts, or donations with conditions attached.

In line with changes to FRS 102, charities will also need to account for most operating leases on the balance sheet, which may significantly affect reported assets and liabilities. A new module and flowchart have been added to help charities navigate this complex area.

New Modules and Simplified Guidance

SORP 2026 includes two new modules:

• 10A: Provisions, contingent liabilities and contingent assets
• 10B: Lease accounting

These additions aim to clarify previously complex areas and provide practical examples for implementation. There are also updates to modules on fund accounting, recognition of income, and trustee/staff remuneration disclosures, among others.

Implementation Timeline

• Effective Date: Financial periods starting on or after 1 January 2026
• First full year impacted: Year-ends of 31 December 2026
• Early adoption: Permitted, though not required

Charities should begin preparing now by reviewing their current accounting policies, lease arrangements, and reporting structures to ensure a smooth transition.

What’s Next?

At Price Bailey LLP, we understand that adapting to new reporting standards can be daunting. That’s why we’ll be offering a series of webinars, training sessions, and practical resources over the coming months to support our charity clients through the transition to SORP 2026.

Stay tuned for announcements on upcoming events, and please don’t hesitate to reach out to your Price Bailey contact for tailored advice.