If you’re working in the UK charity sector, you’ll be familiar with the Charities SORP, the Statement of Recommended Practice that serves as the accepted reporting framework for preparing annual accounts.
Issued by the Financial Reporting Council (FRC) and developed jointly by the UK charity regulators for England and Wales, Scotland, and Northern Ireland, the Charities SORP is the rulebook that explains how charities must prepare their annual financial reports, enabling more than 200,000 registered UK charities to ensure transparency and build public trust.
Charities SORP 2026 came into effect as of 1 January this year. The new standard updates the charitable sector’s accounting practices in line with revised UK financial reporting standards, FRS 102. The 2026 version also introduces a proportionate reporting model, requiring higher levels of disclosure for large entities while minimising the compliance burden on smaller charities, and new requirements to report on sustainability matters.
Who needs to comply?
SORP compliance is mandatory for all UK charities that prepare accruals accounts. Currently this includes any charity with a gross annual income exceeding £250,000, but this threshold is set to rise to £500,000 for financial years ending on or after 30 September 2026. Regardless of income, all charitable companies limited by guarantee must follow the SORP. The SORP does not apply to charities that prepare cash-based accounts.
Charities SORP 2026 introduces a three-tier reporting framework:
- Tier 1: Income up to £500,000. These organisations benefit from simplified disclosure requirements.
- Tier 2: Income between £500,000 and £15 million.
- Tier 3: Income over £15 million. The largest charities must provide the highest level of detail, including mandatory sustainability reporting.
What needs to be reported?
From a sustainability reporting perspective, the most significant changes are to the Trustees’ Annual Report (TAR).
Reports from Tier 3 charities must now include a dedicated sustainability section summarising how they manage environmental, governance, and social topics. This may include, for example, reporting on key performance indicators related to climate risk, data security, business ethics, and board diversity. Tier 3 reporting should also include details on employee engagement and community support.
For Tier 1 and Tier 2, ESG reporting is optional. Trustees may choose to explain the how the charity manages ESG matters and are “encouraged to consider the needs of stakeholders when reporting in this area.”
Charities SORP 2026 requires not only new information to be reported, but a change in the quality of reporting. In addition to sustainability reporting, impact reporting is also now a core requirement for all tiers, and richer communication of achievements including metrics and storytelling is strongly encouraged:
“The impact the charity has made is, arguably, the ultimate expression of its
performance. The report must explain the impact the charity is making and must
consider the long-term effect of its activities on individual beneficiaries and on
society as a whole. In particular, the use of personal beneficiary or society-wide
impact stories may be of value in communicating meaning.“
Reporting for all tiers must include summary of the charity’s main achievements and its impact on beneficiaries and wider society, supported by optional evidence such as statistics, testimonials, or infographics. Tier 2 and Tier 3 reporting requires measurable data together with context and examples that demonstrate how activities in the year have contributed to long-term charitable aims.
There are a number of other significant changes to SORP rules around fund accounting, accounting standards, and other financial and investment topics. For charities already using the SORP or in need of an overview, a summary of changes is available for quick reference.
Reporting timeline
The new rules apply to all accounting periods beginning on or after 1 January 2026.
- Charities with a standard calendar year ending 31 December 2026 will be the first to file under the new rules.
- Those with a typical tax year cycle ending 31 March 2027 or other accounting year-ends have slightly more time to prepare.
Because the SORP requires comparative figures from the previous year, reporting teams should already be tracking 2026 data to ensure 2027 filings are accurate.
Get in touch
Transitioning to SORP 2026 requires early planning and a clear understanding of your charity’s specific tier reporting requirements.
At Grain we have deep experience in reporting frameworks. We’ve helped Mind, Dogs Trust and other nonprofits with ESG strategy, sustainability communications, and disclosure requirements.
If you need support with developing your sustainability narrative, establishing ESG metrics, training trustees on the new SORP ESG requirements, or preparing your annual accounts in compliance with SORP 2026, get in touch!
