The new Charities SORP was released on 31 October 2025, and it represents one of the most significant updates to charity reporting in recent years. Building on the updated FRS 102 framework, the SORP aims to simplify and modernise reporting while improving transparency for funders, regulators, and the public.
There are many changes between the new and previous SORP, too many to detail in this publication, and like with previous SORP it might be that additional information sheets and update bulletins are issued as the new SORP begins being used in practice and fed back upon, but detailed below are a summary of the most significant changes:
A new three-tier structure will classify charities by gross income:
up to £500,000
£500,000 to £15 million
above £15 million
This tiered approach introduces proportionate reporting requirements, recognising that smaller organisations often lack the resources to meet complex disclosure requirements. Larger entities, however, will face expanded expectations for governance and narrative reporting.
- Revenue recognition is also changing The revised SORP introduces a five-step model for recognising income from contracts with customers, bringing the sector closer in line with commercial accounting practices. Non-exchange income such as donations, legacies, and grants will remain under existing guidance but may require clearer disclosure.
- Lease accounting presents another major shift Under the new rules, most operating leases will move onto the balance sheet, meaning charities must recognise both a right-of-use asset and a lease liability. This change could significantly affect balance sheets, particularly for organisations with extensive property portfolios or vehicle leases. Trustees will need to consider how these adjustments impact key ratios, reserves policies, and banking covenants.
- Narrative reporting requirements are being strengthened Tier 3 charities in particular will need to expand disclosures on strategy, sustainability, volunteer contributions, and performance measurement. Trustees’ Annual Reports will play a greater role in communicating impact and stewardship, reinforcing public trust.
The new SORP is applicable to the accounts of relevant charities for reporting periods beginning on or after 1 January 2026. To prepare, charities should identify their tier, review lease agreements and income streams, and engage early with auditors or examiners. Finance teams should receive training on transition adjustments and comparative data requirements. Updating governance documents and report templates now will ensure smoother compliance once the SORP becomes mandatory.
While the revised SORP adds complexity, it also offers an opportunity to align reporting more closely with mission delivery and impact. Proactive preparation will help charities demonstrate accountability and readiness for the future.
Our team has developed a webinar series regarding changes that will affect the charities’ landscape. You can find all the available resources in our Trustees Hub.
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MHA’s Not-for-Profit eNews provides regular insights on key developments affecting charities, education providers, and social enterprises. To discuss how these updates may affect your organisation, please contact a member of our Not-for-Profit Audit and Advisory team.
