November 2025 charity & not-for-profit update
Below are some recent updates from the Charity Commission.
Charities SORP (2026)
The Charities Statement of Recommended Practice 2026 (SORP) was published on 31 October 2025 and will be effective from 1 January 2026. The new SORP reflects changes introduced by the Financial Reporting Council (FRC) to FRS102, these changes include:
- Introduction of 3 tiers based on income levels to ensure proportionate reporting, whilst also meeting the information needs of users;
- Key accounting changes to leases, revenue recognition and provisions, contingent liabilities and contingent assets;
- Advancing reporting in important areas such as impact reporting, reserves, going concern, legacies and volunteering;
- Introduction of proportionate reporting for environmental, social and governance issues.
The Charity Governance Code
The updated code was released on 3 November 2025. The Code outlines universal principles of good governance for charities, serving as a practical framework to guide trustee discussions on standards, behaviours, and processes.
While not a regulatory requirement, it complements statutory obligations and Charity Commission guidance. The Code is designed to help charities cultivate strong governance practices and is distinct from legal mandates. Adhering to its principles and outcomes can provide external stakeholders with confidence that a charity is well governed and operating responsibly.
We advise boards consider the revised code, and you can read more in our article here.
Code of Fundraising Practice
The Fundraising Regulator’s new Code of Fundraising Practice, that came into effect on 1 November 2025, introduces a principles-based approach focused on honesty, respect, openness, and legality. It replaces detailed rules with flexible guidance suited to modern fundraising methods.
The code is easier to navigate and supported by new guides on decision-making, due diligence, and managing third-party fundraisers. Organisations should review the code, update internal policies, and train staff to ensure compliance.
The code and support materials are available in English and Welsh on the Fundraising Regulator’s website here.
The Charity Commission’s charity sector risk assessment 2025
The Charity Commission’s first annual risk assessment identifies two key risks to the sector: financial resilience and risks to public benefit.
Financial pressures include rising costs, tax changes, and increased service demand, with 42.6% of charities reporting spending exceeding income. Public benefit risks stem from abuse of charitable status, dominant individuals, and lack of regulatory understanding, with a 23% rise in related compliance cases.
Trustees are urged to strengthen financial control and reporting, improve collaboration and follow governance guidance.
Despite these challenges, public trust in charities remains high and second only to trust in doctors.
Safeguarding for charities and trustees
Charities must ensure they do not cause harm, with extra duties for those working with children or adults at risk. Trustees hold ultimate responsibility, even when tasks are delegated. A strong safeguarding culture protects people, reduces risks, and ensures concerns are addressed properly.
Trustees must:
- Identify and manage risks based on activities and operations;
- Maintain and review safeguarding policies annually;
- Conduct checks on staff, volunteers, and trustees, including DBS where relevant;
- Protect staff and volunteers through anti-bullying policies and insurance; and
- Handle and report incidents promptly, securely, and in line with procedures.
Read more about safeguarding and handling allegations here.
Charity Commission’s annual public meeting
The Charity Commission’s annual public meeting is a statutory event where it presents its annual report, outlines regulatory priorities, and engages with the public. It features speeches from senior leaders, updates on sector challenges like financial pressures and governance, and Q&A sessions with attendees.
This year the meeting will be held on 9 December 2025 at 11am. You can register here and there is an option to attend in person or online.
Changes to charity law regarding moral (ex gratia) payments
From 27 November 2025, charity law changes give trustees more flexibility over moral (ex gratia) payments. Trustees must now apply an objective test, whether they could reasonably be seen as under a moral obligation, rather than relying on personal feelings.
Charities can self-authorise small payments within income-based limits:
- £1,000 (income ≤£25k);
- £2,500 (≤£250k;
- £10,000 (≤£1m); and
- £20,000 (>£1m)
Please note, larger sums still require Charity Commission approval.
Trustees may delegate decisions to staff or committees but remain accountable. Restrictions in governing documents or legislation still apply, and national museums cannot make payments from collections. These powers are not retrospective; existing applications follow old rules. Updated Commission guidance helps charities decide when consent is needed and ensure compliance.
Charity audit thresholds
From 1 October 2026, charities in England and Wales will see significant changes to financial reporting thresholds. Key changes include:
- The income threshold for a statutory audit will rise from £1m to £1.5m;
- Where income is greater than £500k (currently £250k), the asset threshold for a statutory audit will rise from £3.26m to £5m; and
- Independent examinations will be required where income is greater than £40k, this is currently £25k.
Fraud awareness week
Fraud Awareness Week (commencing 8 December 2025) is vital because every charity, regardless of size or mission, is vulnerable to fraud and cybercrime. Fraudsters exploit crises and technology, targeting funds, data, and people. Raising awareness helps charities strengthen their defences, protect assets, and maintain public trust.
Common risks include:
- Payment diversion;
- Procurement fraud; and
- Cyber-enabled attacks.
By engaging with this campaign, charities can access free resources, share best practice, and build a strong anti-fraud culture. Find practical guidance and tools on the Prevent Charity Fraud website to help safeguard your organisation.
Managing charity finances
The Charity Commission emphasises that trustees are legally responsible for ensuring charity’s money are safe, properly used, and accurately recorded. Even with financial experts on board, all trustees must oversee financial management. Use the Charity Commission’s Internal Financial Controls Checklist to ensure funds are secure, used for charitable purposes, and protected from fraud or cybercrime.
Key actions include:
- Spending only in line with your charity’s governing document;
- Setting and monitoring budgets;
- Keeping accurate financial records for at least six years;
- Managing risks and maintaining a regularly reviewed risk register;
- Establishing a reserves policy and explaining it in the annual report; and
- Ensuring proper handling of trustee expenses and avoiding unauthorised payments.
If financial difficulties arise, act quickly and seek expert advice, adjust spending, or consider alternative funding. Significant financial changes may require reporting to the Charity Commission as a serious incident. Find additional tips on managing charity finances here.
Reminder: Companies House verification
Since 18 November 2025, identity verification with Companies House is now mandatory for company directors and people of significant control. Please act now to make sure this verification has taken place to avoid any delays in submitting returns to Companies House.
More details can be found here.
Changes to strategic reporting for charity corporate subsidiaries
For trading subsidiaries, which are listed companies (and not registered charities), the UK government has accelerated reforms to corporate reporting, aiming to reduce burdens on thousands of companies and support economic growth.
Three legislative changes will be introduced:
- Removing the requirement for a director’s report for all companies, affecting 440,000 businesses;
- Exempting most medium-sized private companies from preparing a strategic report, benefiting 44,000 businesses; and
- Exempting 7,000 wholly owned subsidiaries if disclosures are included in the parent company’s report.
It is estimated to save businesses £230 million annually and promote more proportionate reporting, though some details like the director’s report removal require further clarification. Read more about this here.
International Non-Profit Accounting Standard (INPAS): A global milestone for non-profit reporting
On 9 October 2025, the world’s first International Non-Profit Accounting Standard (INPAS) was launched, marking a historic step toward global financial transparency in the non-profit sector. Developed over six years with international collaboration, INPAS aims to standardise reporting while respecting local contexts. The goal is for at least ten countries to adopt the standard by 2030.
The focus now shifts to implementation, helping non-profits worldwide enhance accountability and governance through consistent financial reporting. Currently there is no indication of if/when the UK will adopt this standard, therefore the Statement of Recommended Practice (SORP) and FRS 102 remain the key reporting standards for charities and NFP entities in the UK.
Martyn’s Law
The Terrorism (Protection of Premises) Act 2025, known as Martyn’s Law, introduces new duties for charities that own public premises or host events. Coming into force after a two-year implementation period, the law requires responsible persons to plan for terrorist attacks and adopt proportionate safety measures.
Duties are tiered as standard for premises expecting 200+ people and enhanced for 800+. Enhanced sites must document compliance and may need measures like monitoring or safety glass. Schools and places of worship remain under standard tier only.
Charities should review premises, assess capacity, and prepare procedures now to ensure compliance when guidance is published. A factsheet produced by the Home Office can be found here.
CQC’s improvement plans for 2026
The Care Quality Commission (CQC) is rebuilding its regulatory approach to improve health and social care oversight. Immediate priorities include simplifying provider registration, clearing backlogs, and delivering 9,000 assessments by September 2026. Longer-term changes focus on revising assessment frameworks, upgrading digital platforms, and enhancing data management.
Public consultation on “Better regulation, better care” is underway, with final frameworks due in summer 2026. Providers and stakeholders can join online sessions and workshops to shape these reforms.
CQC aims for quicker decisions, clearer guidance, and stronger safeguards, ensuring better care through collaboration and technology-driven improvements. More information can be found here.
Association of Charitable Foundations (ACF) report
In October, ACF released its latest report which analyses UK charitable foundations’ grant-making in 2023–2024, based on UKGrantmaking data. It shows foundations’ vital role in supporting charities amid economic pressures, rising demand, and declining government funding.
Total grant-making reached £8.24bn, up 12% from the previous year with corporate foundations seeing the largest growth (25%), while family foundations rose 10%. Endowment values remained flat in real terms, as many foundations prioritised immediate need over asset preservation.
Unsurprisingly demand for grants surged, with application volumes increasing by up to 400%, partly driven by AI-enabled tools. Despite growth, competition intensified, and success rates fell below 5%.
Autumn Budget 2025
The Chancellor announced her Autumn Budget on 26 November 2025. Whilst the content wasn’t a surprise delivery in the House of Commons due to an early leak of the content, there are key elements that may impact charities including:
- VAT zero-rated for donated goods: A new VAT relief for business donations of goods to charities, will be effective from 1 April 2026. The measure removes VAT that would otherwise be due when businesses donate goods to registered charities for onward distribution to beneficiaries or for use in delivering the charity’s services, expanding relief beyond goods donated for resale (e.g. in charity shops). There is, however, a limit of £100 per item or £200 for certain essentials, and no cap on the quantity donated.
- Charity compliance: New rules from April 2026 will tighten legislation on tainted donations, approved investments, and non-charitable expenditure.
- Inheritance tax: The IHT exemption will be restricted to gifts made directly to UK charities and community amateur sports clubs.
- Social housing VAT: Consultation planned to simplify VAT treatment for land development.
- Search and rescue vehicles: Vehicle excise duty exemption from April 2027 (subject to consultation).
- Other measures:
- National Living Wage rises to £12.71/hour from April 2026;
- Pension salary sacrifice capped at £2,000/year from April 2029;
- Corporation tax penalties doubled from April 2026; and
- Homeworking relief removed; reimbursement easements introduced.
Azets Charity Partnership
We are delighted to be partnering with The King’s Trust to support their work with young people from disadvantaged backgrounds across the UK.
This is a cause close to our heart at Azets and linked to our desire to improve social inclusion and our purpose to improve the lives of our colleagues, clients and communities. Our staff are actively encouraged to support the charity through office fundraising events and volunteering their time with the Trust.
Across the month of December, we are donating £1,000 to 12 charities nominated by our staff. So far this includes these Charities: Saints in the Community, Abbie’s Army and Barnekreftforeningen.
Season’s greetings and best wishes for 2026
As we approach the end of 2025, we would like to take this opportunity to thank you for your continued support and partnership throughout the year.
Wishing you success, good health, and happiness in 2026 and beyond.
We are here to help
If you need any support or advice in relation to the latest sector guidance or have any general questions, please get in touch with our charity sector team.
