If you run or advise a charity or not-for-profit organisation in England and Wales, there is some genuinely welcome news to be aware of. The Department for Culture, Media and Sport (DCMS) has confirmed significant changes to charity financial thresholds, aiming to create a more proportionate legal framework and reduce the administrative burden faced by the sector.

These changes are coming into force on 30 September 2026 and are estimated to generate annual savings which, for many smaller and mid-sized organisations, could be substantial.

What is changing and when

For accounting periods ending on or after 30 September 2026, new financial thresholds will take effect on audit requirements, reporting obligations and how charities prepare their accounts.

The key changes are as follows.

  • The audit threshold rises from £1 million to £1.5 million income.
  • The independent examination threshold rises from £25,000 to £40,000.
  • The receipts and payments accounts option for non-company charities increases from £250,000 to £500,000.
  • The asset threshold that can trigger an audit requirement rises from £3.26 million to £5 million, with the associated income condition rising from £250,000 to £500,000.
  • The group accounts preparation threshold also increases from £1 million to £1.5 million.

Why this matters

These thresholds had remained largely unchanged since 2015, and the audit threshold rise of 50% broadly reflects compounded inflationary increases over that period. In practice, many charities had been pushed into higher levels of scrutiny not because they had grown significantly, but simply because the thresholds had not kept pace with inflation or the realities of running an organisation in 2026.

The most significant change for most organisations is the audit threshold. Charities with income below £1.5 million will no longer be legally required to undertake a full audit and may opt for an independent examination instead, which is less intensive and typically less costly. The government estimates this will remove approximately 2,000 charities from the mandatory audit requirement and save millions in professional fees and administrative resources.

The increase to the independent examination threshold was supported across the sector, as it directly addresses the administrative burdens on the smallest charities. Organisations with income under £40,000 will no longer need any formal external scrutiny of their accounts at all, freeing up time and resources for the work that actually matters to them.

For non-company charities, the ability to use receipts and payments accounts up to £500,000 income, double the previous limit, means simpler bookkeeping is available to a much wider group of organisations.

What you should do now

The fact that legislation has not yet been formally laid before Parliament means there is still some uncertainty around the precise implementation date, and trustees and finance leads should keep an eye on developments. That said, charities should begin preparing now by reviewing their financial reporting processes and discussing implications with their accountants.

It is worth noting that a change in your legal obligations does not automatically mean a change in what is right for your organisation. Some funders and major donors expect audited accounts regardless of whether one is legally required. Trustees also have broader governance responsibilities, and the level of assurance provided by an independent examination is lower than that of a full audit.

Moving to a lighter-touch process is a decision that should be made carefully, with proper consideration of who relies on your financial information and what they need from it.

If your charity is approaching any of these thresholds, now is a good time to review your position and plan ahead. We work with a range of not-for-profit organisations and are happy to talk through what the changes mean for you specifically.

Get in touch

If you would like to discuss how the new thresholds affect your charity or not-for-profit organisation, or simply want to make sure your accounts are in the best possible shape ahead of the changes, please get in touch. We offer a no-obligation initial conversation and are always happy to help.