Demystifying the New Charities SORP: The Tiered Reporting Model

Date: May 2026

Summary

As of 1 January 2026, a new Charities Statement of Recommended Practice (SORP) is in effect. The biggest change is the introduction of a “tiered reporting model” designed to simplify reporting for smaller charities while ensuring transparency for larger ones.

Background: What is changing?

The new Charities SORP replaces previous versions to better align with updated UK GAAP (Generally Accepted Accounting Practice). It introduces three distinct tiers of reporting based on a charity’s income and assets.

  • New Regulation: Charities SORP (FRS 102) Second Edition / 2026 Update
  • Effective From: Financial years starting on or after 1 January 2026.

How this affects you

The complexity of your financial statements now depends on which tier your charity falls into:

  • Tier 1 (Small): Gross income under £500,000. Simplified reporting requirements, focusing on core financial health. (Eligible for Receipts & Payments accounts if non-company).
  • Tier 2 (Medium): Gross income between £500,000 and £1.5 million. Standard reporting requirements, similar to previous FRS 102 SORP. (Standard accruals accounts; typically requires an Independent Examination).
  • Tier 3 (Large): Gross income over £1.5 million. Enhanced disclosures, particularly around impact reporting and executive pay. (Requires a mandatory statutory audit and enhanced disclosures).

Most of our clients will find themselves in Tiers 1 or 2, which may reduce some of the administrative burden previously faced.

What you need to do

  • Identify Your Tier: Review your last two years of income to determine which reporting tier you fall into for the 2026 financial year.
  • Review Accounting Policies: Ensure your accounting software and internal processes are updated to capture the specific data required for your tier.
  • Training: Ensure your treasurer and finance team understand the specific disclosure requirements for your new tier.

How Bristol Community Accountants CIC can help

We are here to ensure your transition to the new SORP is seamless:

  • Tier Assessment: We can help you determine exactly which tier you fall into and what it means for your year-end accounts.
  • Financial Statement Preparation: Our team is already trained in the new 2026 SORP standards and can prepare your accounts to be fully compliant.
  • Software Setup: We can assist in configuring your bookkeeping software (like Xero or QuickBooks) to meet the new reporting requirements.

Disclaimer: This document is for informational purposes only and does not constitute legal or financial advice. We recommend consulting with a professional advisor regarding your specific circumstances.