The long-awaited consultation draft of the new Charities SORP (SORP 2026) has now been released. You can access the full draft here: SORP 2026 Consultation Draft

Some of the key proposed changes include:

• A new three-tier reporting regime based on income, each accompanied by differing levels of disclosure requirements:
  • Tier 1: Charities with income up to £500,000
  • Tier 2: Income between £500,000 and £15 million
  • Tier 3: Income over £15 million
• Enhanced Trustees’ Annual Report disclosures, including information on impact, use of volunteers, and sustainability. Charities in tier 3 will be required to report on environmental, governance, and social matters, while those in tiers 1 and 2 are encouraged to do so.
• Clarified guidance on income, with separate sections on exchange (e.g. contract income – including the new 5-step revenue recognition model for income from exchange transactions) and non-exchange transactions (e.g. donations and grants). The performance model remains mandatory for grant income recognition.
• New modules covering provisions, contingent liabilities and assets—including accounting for funding commitments—as well as lease accounting.
• New module on lease accounting following changes within FRS102, including guidance identifying leases, identifying short-term or low-value leases that may qualify for simplification, and guidance on nominal or peppercorn arrangements.
• Cash flow statements will no longer be required for charities with income under £15 million (unless still required under FRS102).

As always, the detail matters—and with changes of this scale, it’s important for charities to review the proposals carefully.

The consultation remains open until 20 June 2025, providing an opportunity to engage and respond.

If you’d like help understanding how these changes might affect your charity, don’t hesitate to get in touch.