Upcoming charity reporting changes: practical points for trustees

The government has recently announced changes to the accounting and reporting thresholds which apply to charities. These changes will take effect in September of this year and will alter the reporting requirements that apply to many charities. This may mean that some charities may no longer need an independent examination or audit of their accounts.

Impact on charities

It is anticipated that the proposed changes will help to lessen the administrative burden for charities and will reduce the expenditure involved with complying with reporting requirements.

The government estimates that these changes will result in annual savings of £47 million per year on average for the charity sector.

Key reporting requirements for charities

The changes primarily relate to two types of reporting requirement:

• The Charity Commission requires charities with a certain level of income to ensure that their accounts are independently examined. An independent examination is a less rigorous form of external scrutiny than an audit, designed to provide assurance that the accounts are consistent with the underlying records and have been prepared in line with applicable accounting requirements. Charities with a higher level of income are required to have the independent examination conducted by a member of certain specific accountancy bodies (such as ICAEW, ACCA, or ICAS).
• Charities with a much higher level of income are required to have their accounts audited. This involves a detailed and thorough review of accounts by a qualified auditor who certifies whether the accounts are “true and fair”.

Summary of the changes

There are some key changes to the reporting thresholds that apply to charities:

Key takeaways

Importantly, the government has chosen to retain some reporting thresholds at their previous levels despite increasing others. Charity trustees should be mindful that certain filing and reporting obligations may still apply even where the threshold for independent examination or audit has increased.

A key example is that charities with an income of over £25,000 must continue to provide a copy of their annual reports and accounts to the Charity Commission. A charity with an income of £30,000 will therefore still need to file accounts with the Charity Commission despite no longer needing an independent examination of their accounts.

What trustees should do now

Charity trustees should take the following steps ahead of these changes:

1. Review your charity’s gross income and asset value for the most recent financial year and compare it against the new thresholds to establish which reporting requirements will apply.
2. Check when your charity’s current financial year ends — the new thresholds apply to financial years beginning on or after 1 September 2025, so the timing of your year-end will determine when the changes affect you.
3. If you have already commissioned an independent examination or audit for the current financial year, you should generally complete that process even if the new thresholds would not require it as the changes apply prospectively.
4. Consider whether your charity’s governing documents contain any specific audit or examination requirements that go beyond the statutory thresholds as these will continue to apply regardless of the legislative changes.
5. Remember that even if your charity is no longer required to have an independent examination, you must still prepare annual accounts and, if income exceeds £25,000, file them with the Charity Commission.

How can we help

If you would like to discuss how these reporting changes affect a charity with which you are connected, or if you have any questions about your charity’s accounting and reporting obligations, please contact our charity team. We would be delighted to assist.