This is the most consequential change to charity reporting in a decade, it is unambiguously in charities’ favour, and a great many trustees do not yet know it is coming.
If your charity’s financial period ends on or after 30 September 2026, the rules that determine whether you need an audit — and how much you spend on it — have changed.
What exactly is changing?
For charity financial periods ending on or after 30 September 2026:
Audit threshold: rises from £1 million to £1.5 million of gross income. The asset test also moves — an audit is required where gross assets exceed £5 million (previously £3.26m) and income exceeds £500,000 (previously £250,000).
Independent examination threshold: rises from £25,000 to £40,000 of gross income.
Qualified examiner threshold: rises from £250,000 to £500,000. Above this, your examiner must be a member of a body listed in the Charities Act 2011 — which includes ICAEW.
Receipts and payments accounts: available to non-company charities up to £500,000 (previously £250,000).
Unchanged: registration at £5,000, annual return above £10,000, and filing accounts with the Commission above £25,000.
These are the thresholds for England and Wales. Scotland (OSCR) and Northern Ireland operate separate regimes.
What does this mean for my charity in practice?
If your income is between £1m and £1.5m: you may be moving out of audit and into independent examination. For a charity of that size, the saving is usually substantial — an examination is a narrower engagement requiring far less time.
If your income is between £250,000 and £500,000: you may no longer need a *professionally qualified* examiner, though most charities of that size sensibly continue to use one.
If your income is between £25,000 and £40,000: you may fall out of the examination requirement altogether.
If your assets are between £3.26m and £5m: the asset test may no longer catch you.
The date that matters is your financial period end, not the date you prepare the accounts. A 31 August 2026 year end still falls under the old rules; a 30 September 2026 year end does not.
So can we just stop having an audit?
Not automatically — and this is where trustees get into difficulty.
An audit can still be required regardless of the thresholds, by:
- your governing document (many older constitutions simply say “the accounts shall be audited”, and mean it);
- a funder or grant condition;
- a lender’s covenant;
- the regulator, in specific circumstances;
- or a trustee resolution, if the board chooses to retain one voluntarily.
Check the governing document first. Amending it, if that is what you decide, takes time and may itself require Commission consent.
And consider what you would be giving up. For many charities, the audit is the only occasion on which anyone independent examines the numbers and the controls. Dropping it without putting anything in its place is precisely when errors begin to go unnoticed.
What about Charities SORP 2026?
Do not consider the thresholds in isolation. Charities SORP 2026 applies to reporting periods beginning on or after 1 January 2026, and introduces a three-tier structure based on income:
- Tier 1: up to £500,000
- Tier 2: £500,000 to £15 million
- Tier 3: above £15 million
There are also new expectations in the Trustees’ Annual Report — around reserves, impact and sustainability — and changes to lease accounting and income recognition flowing from the revised FRS 102.
So the picture is mixed: your charity may gain flexibility over the type of scrutiny it needs, while simultaneously facing more demanding narrative reporting. Both need planning for in the same year.
What should trustees do now?
1. Establish your period end. On or after 30 September 2026 and the new rules apply. Before it, they do not.
2. Read your governing document. It may require an audit regardless of what the law says. This is the step most often skipped, and the most likely to cause a problem.
3. Ask your funders and lenders, before you cancel anything. Some grant agreements and covenants specifically require audited accounts.
4. Decide what replaces the scrutiny. If you leave audit, consider an assurance or controls review — a fraction of the cost, and it preserves the independent check.
5. Plan for SORP 2026 at the same time. Doing both changes in one year is far easier than discovering the second one halfway through.
Frequently asked questions
What are the new charity audit thresholds from September 2026?
For financial periods ending on or after 30 September 2026, an audit is required where gross income exceeds £1.5 million (up from £1 million), or where gross assets exceed £5 million and income exceeds £500,000. Independent examination is required above £40,000 of income, up from £25,000.
My charity’s year end is 31 August 2026 — do the new rules apply?
No. The new thresholds apply to financial periods ending on or after 30 September 2026. A 31 August 2026 year end falls under the old limits — audit above £1 million, examination above £25,000. Your next year end will fall under the new rules.
Our income has dropped below £1.5m. Can we stop the audit?
Check your governing document first — many older constitutions require an audit regardless of the statutory thresholds, and amending them takes time. Also check funder and lender conditions. If nothing else requires it, you can move to independent examination, but the decision should be a documented trustee resolution.
Who can act as our independent examiner?
Below £500,000 of income, an examiner needs the requisite ability and practical experience. Above it, they must be a member of a body listed in the Charities Act 2011 — which includes ICAEW. The examiner must also be genuinely independent of the charity, which rules out trustees, employees and anyone closely connected.
Does LMJ Group carry out charity audits?
No — LMJ Group is not a registered auditor and does not carry out audits. We carry out independent examination, which as ICAEW members we can do at every charity income level, including above the new £500,000 threshold. Where an audit is genuinely required, we will tell you and refer you to a registered auditor.