Key Changes, Challenges and Opportunities for Charities
The charity landscape continues to evolve, and this autumn brought several important regulatory and financial updates that trustees and leadership teams should be aware of. We’ve summarised the key points below to help you stay compliant, prepared and confident in your planning.
You can download the full Charity News Autumn 2025 update here.
The New Charity SORP (2025)
The 2025 Charity SORP has been finalised and will apply to accounting periods beginning on or after 1 January 2026. This version introduces a clearer three-tier approach based on charity size, which aims to improve proportionality and reduce reporting burdens for smaller organisations.
Key updates include:
- Revised rules on income recognition, including grant conditions and performance obligations.
- Updated requirements for leases and funding arrangements.
- Stronger expectations on governance disclosure, particularly around decision-making and risk.
- A clearer structure intended to improve readability and consistency for both preparers and users of charity accounts.
Because the new SORP aligns with changes coming under FRS 102, charities should start planning upgrades to systems and processes now to avoid a rushed transition next year.
Financial Pressures and Sector Outlook
Many charities continue to face squeezed budgets. Rising employer NICs and inflation in service delivery costs are placing additional pressure on reserves, while demand for charitable services remains historically high.
Despite this, fundraising sentiment is improving and new VAT relief for some fundraising events may help boost net income. Charities are encouraged to review their fundraising mix, pricing, and event structures to ensure they are making the most of available tax reliefs.
Regulatory and Compliance Updates
Several other important regulatory changes are coming into effect:
- Annual Return updates – New questions continue to focus on governance, safeguarding and financial resilience.
- Companies House reforms – Identity verification for directors and PSCs will soon become mandatory, and charities operating through company structures should prepare for this.
- Audit threshold increase (from September 2026) – The threshold will rise from £1m to £1.5m, taking some charities out of mandatory audit. However, trustees should still consider whether an audit remains appropriate based on funder expectations and internal governance needs.
Need support navigating these changes?
Dunkley’s works closely with charities of all sizes, offering audit, independent examination, accounts preparation, VAT guidance, governance advice and strategic support. If you’d like help understanding how the new rules affect your charity, we’re here to assist.
You can read the full Charity News Autumn 2025 document here.
If you’d like advice on this, contact our experienced team here at Dunkley’s Accountants. Call us or book a consultation online to get started on 01454 619900 or email advice@dunkleys.accountants.