If your charity’s gross income is under £40,000, you will not need an independent examination. The threshold has been £25,000 since 2009 and rises on 30 September 2026, along with the audit threshold, the receipts and payments threshold and the point at which your examiner has to be professionally qualified.
The date is not the one most trustees assume. It is not about your year end falling after 30 September. It is about which financial year you are reporting on; and for a charity with a 12-month year, the change reaches back to periods that began on 1 October 2025. Some charities are already in a year the new rules apply to.
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Which financial year this actually applies to
The increases are made by the Charities Acts 1992 and 2011 (Substitution of Sums) Order 2026, and they take effect for reporting periods ending on or after 30 September 2026.
Ending, not beginning. So for a charity with a standard 12-month year, the new figures apply to any year that started on or after 1 October 2025. A charity with a 31 March year end is already partway through a year the new thresholds govern. A charity with a 31 December year end will use them for the year ending 31 December 2026.
Work out your year end first and everything below follows from it. Getting this the wrong way round is the single most common mistake being made about this change, and it leads charities to commission scrutiny they no longer need, or to skip scrutiny they still do.
The thresholds, in the order you need them
These apply to charities in England and Wales registered with the Charity Commission, reporting under the Charities Act 2011. Take your gross annual income for the financial year in question.
- Under £40,000. No external scrutiny required by law. Up from £25,000.
- £40,000 up to £1.5 million. Independent examination, unless something else requires an audit.
- Over £500,000. Still an independent examination, but the examiner must be a member of one of the bodies specified in charity law. That qualification threshold was £250,000.
- Over £1.5 million. Audit. The figure was £1 million.
There is a second route into an audit that catches asset-rich charities with modest income. You need an audit if your gross assets exceed £5 million and your gross income is over £500,000. Both parts have to be true. Previously the test was assets over £3.26 million with income over £250,000, so this is a real easing for charities holding property or permanent endowment on a small operating income.
Two things the thresholds do not override. You still need an audit if your governing document requires one, if another piece of legislation requires one, or if your trustees decide to have one. And if you prepare group accounts as a parent charity, the preparation and audit thresholds both move from £1 million to £1.5 million of aggregate gross income.
If your charity is a company, check the other rulebook
This is where charities most often come unstuck, and it has not changed.
A charitable company sits under the Companies Act 2006 as well as the Charities Act 2011, and the two have separate audit thresholds. Clearing the charity law threshold does not release you from company law. Where a charitable company is above the Companies Act audit threshold, the audit is done under company law and charity law audit requirements are specifically disapplied.
If you are a CIO or an unincorporated association, none of this applies to you and the section above is the whole picture. If you are a charitable company, the new thresholds are a conversation to have with your accountant rather than a decision to take from an article.
Receipts and payments accounts, and whether to switch
Charities that are not companies can prepare simpler receipts and payments accounts rather than full accruals accounts, and that option now runs up to £500,000 of gross income rather than £250,000.
That will tempt a lot of charities in the £250,000 to £500,000 band, particularly with the Charities SORP 2026 and the revised FRS 102 arriving for periods beginning on or after 1 January 2026. Simpler accounts, less work, lower fees.
Before switching, three questions worth putting to the board. Does your governing document require true and fair accounts, and if so, can it be amended? Do your funders expect accruals accounts, and have you asked them rather than assumed? And are you growing in a way that will push you back over £500,000 within a couple of years, in which case you would be changing your accounting basis twice for no gain.
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You are now exempt. Should you have an examination anyway?
Around 10 of the 21 thresholds DCMS consulted on were raised, and the stated aim was proportionality – less regulatory burden on small charities, with transparency retained. For a charity between £25,000 and £40,000, that lands as a straightforward saving of a few hundred pounds and a chunk of trustee time.
The saving is real. It is also not the only thing in play, and this is a board decision rather than an administrative one.
An independent examination is a document funders read. Trusts and foundations frequently ask for externally scrutinised accounts, and some grant application forms ask directly whether accounts have been examined or audited. A charity that quietly stops having them because it no longer has to may find the next funding round harder, and will not necessarily connect the two. The Commission’s own reporting requirements have not gone anywhere either; you still file, and the accounts you file are still public.
Set against that, an examination on a £30,000 income is a significant proportion of what you have to spend. There is no correct answer that applies to every charity, which is precisely why it belongs in the minutes rather than being decided by whoever renews the arrangement each year.
Whatever you decide, write down why. A trustee board that has considered the question and recorded its reasoning is in a good position two years from now. One that simply stopped is not.
What to do before your year-end
Four things, none of which needs an adviser to start.
Find out which financial year the new thresholds first apply to for your charity, using your year-end rather than today’s date. Take your gross income for that year and read it against the list above. If you are a charitable company, check the Companies Act position separately. And if the answer moves you between categories, tell whoever currently prepares or examines your accounts before they start work on the assumption that nothing has changed.
One caution on guidance. The Commission has said it intends to update CC15d, its charity reporting and accounting essentials, before 30 September 2026, and DCMS and the Commission are expected to review the independent examination guidance in CC31 and CC32 as well. If you are reading those pages before the update lands, check the last-updated date at the top rather than assuming the figures are current.
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