Changes to charity audit thresholds in England and Wales
Significant changes are coming to charity audit thresholds in England and Wales
From 1 October 2026, charities in England and Wales will see significant changes to financial reporting thresholds, following a review led by the Department for Culture, Media and Sport (DCMS). These updates aim to make charity regulation more proportionate and reflective of inflation and operational realities.
The income threshold for a statutory audit will rise from £1 million to £1.5 million. This means charities with income below £1.5 million will no longer be legally required to undertake a full audit, potentially saving time and costs. Instead, they may opt for an independent examination, which is less intensive but may offer lower levels of assurance for stakeholders.
Why did the review take place?
The review followed the Law Commission’s 2017 recommendation to reassess thresholds every ten years. The last full review was in 2013, with changes implemented in 2015. The goal of the review is to ensure charity regulation remains fair, transparent, and aligned with economic conditions.
Updated thresholds (effective 1 October 2026)
Threshold area | Current Level | New Level |
|---|---|---|
Independent Examination Requirement | £25,000 | £40,000 |
Qualification for Independent Examiners | £250,000 | £500,000 |
Non-company charity accruals accounts preparation instead of receipts and payments accounts | £250,000 | £500,000 |
Audit Requirement (Income) | £1,000,000 | £1,500,000 |
Audit Requirement (Assets) - where income is greater than £500,000 (previously £250,000) | £3,260,000 | £5,000,000 |
Group Accounts (Income) | £1,000,000 | £1,500,000 |
Audit of Group Accounts | £1,000,000 | £1,500,000 |
The following remain unchanged:
- Registration thresholds: £5,000 (general), £100,000 (excepted charities)
- Annual return & report thresholds: £10,000 and £25,000 respectively
- Company House filing deadline: 9 months after the year end
- Charity Commission filing deadline: 10 months after the year end
The below table highlights the different level of scrutiny which charities will face under the new thresholds:
£0-£5K gross income | >40K gross income | >£500K gross income | >£1.5M gross income or >£500k gross income & Balance Sheet >£5M | |
Registration with Charity Commission | No | Yes | Yes | Yes |
Accounting records | Proper accounting records must be kept | Proper accounting records must be kept | Proper accounting records must be kept | Proper accounting records must be kept |
Accounting basis | Unincorporated charities: Receipts and payments OR accrual basis Incorporated charities: Accrual basis* | Unincorporated charities: Receipts and payments OR accrual basis Incorporated charities: Accrual basis* | Accrual basis* | Accrual basis* |
Scrutiny | None required | Independent examination | Independent examination | Full accounts audit |
Group accounts | Optional | Optional | Optional | Must be prepared |
*If your charity prepares accounts on an accruals basis then they must follow the SORP.
Next steps for charities
The legislation is expected to be laid before Parliament in 2026, with implementation from 1 October 2026. Charities should begin preparing now by reviewing their financial reporting processes and discussing implications with their accountants.
To understand more about the difference between an audit and independent examination please see here.
Charities registered in Scotland
The changes outlined above apply only to charities registered with the Charity Commission in England and Wales. In 2025, the Scottish Government announced plans to raise the charity audit threshold for organisations registered with the Office of the Scottish Charity Regulator (OSCR) from £500,000 to £1 million. This move was intended to align guidance across jurisdictions, however, with no implementation date confirmed for Scotland and the new thresholds now in place for England and Wales, we await further updates for Scottish charities.
We’re here to help
We understand that charity regulation can be complex, not only due to recent changes, but also because of variations across different jurisdictions. If you’d like to learn more about how we can support you, please contact a member of our specialist team or speak to your usual Azets adviser.
