April 2026 Updates: National Living Wage & VAT Zero-Rating Changes

Welcome to the first monthly update from Bristol Community Accountants CIC! The landscape for UK charities and Community Interest Companies (CICs) is seeing significant shifts in 2026, from charity law reporting to employment rights.

As we enter the new financial year, several key changes come into effect this April. Here’s what your charity or CIC needs to know to stay compliant and financially healthy.

1. National Living Wage Increases (Effective April 2026)

One of the most immediate impacts on charity budgets is the increase in the National Living Wage. As of April 2026, the rate has increased by approximately 4.1%.

What you need to do:

  • Review Budgets: Immediately review your current payroll to ensure all eligible staff are being paid the new legal minimum.
  • Update Payroll Systems: Ensure your payroll software or provider has updated the rates. (If Bristol Community Accountants handles your payroll, rest assured we have already implemented these updates for you!)
  • Forecast: Consider the knock-on effect for pay differentials and future grant applications.

2. Changes to Statutory Sick Pay (SSP)

The Employment Rights Act 2025 continues its rollout through 2026. A crucial change taking effect is the removal of the lower earnings threshold for Statutory Sick Pay (SSP).

What this means: Previously, employees had to earn an average of at least £123 per week to qualify for SSP. With this threshold removed, more part-time and lower-paid workers in the charity sector are now eligible for sick pay from day one.

Action Point: Update your HR policies and inform your team. Be prepared for a potential increase in SSP costs.

3. VAT Zero-Rating for Donated Goods

On a positive note, April 2026 introduces a new VAT zero-rating for business goods donated to charities for distribution or use.

This change is designed to support “circular economy” initiatives. If your charity receives goods from corporate partners, this can significantly reduce costs and administrative burdens for the donor, potentially encouraging more corporate giving.

Action Point: If you regularly receive corporate donations in kind, communicate this new tax benefit to your corporate partners.

Looking Ahead: Tax & Reporting

While the April updates are pressing, keep these larger horizons in mind:

  • New Charities SORP: If your financial year started on or after 1 January 2026, you are now operating under the new Statement of Recommended Practice (SORP), which introduces a tiered reporting model.
  • Threshold Increases (October 2026): Good news is on the way! The income limit for a mandatory statutory audit is set to increase to £1.5 million, and the threshold for an independent examination rises to £40,000.

We’re Here to Help

Navigating these legislative changes can be complex, but you don’t have to do it alone. Bristol Community Accountants CIC is dedicated to supporting the UK not-for-profit sector with expert bookkeeping, payroll, and independent examinations.

If you have questions about how these changes affect your organisation, please get in touch with our team today:

Stay tuned for next month’s post, where we will demystify the new Charities SORP and explain what the tiered reporting model means for your financial statements.