Charities SORP 2026 Consultation
The draft consultation for the Charities Statement of Recommended Practice (SORP) 2026 was released in April 2025, with the final version expected Autumn 2025.
As part of this draft, the highly anticipated three-tier reporting was formally announced, meaning, for accounting periods beginning on or after 1 January 2026, the current two-tier reporting system will be replaced by the following three brackets:
- Those with income below £500k
- Those with £500k-£15m income
- Those with £15m+ income
The draft also includes significant changes to align with updates in financial reporting standards (FRS 102) – particularly in relation to income recognition and lease accounting.
The consultation period is open until 20 June 2025, and you can have your say here.
Code of Fundraising Practice
The Fundraising Regulator published a new Code of Fundraising Practice, which will come into effect on 1 November 2025 for organisations in England, Wales and Northern Ireland, as well as for charities registered in these areas but fundraising in Scotland.
This updated code is designed to be clearer, more flexible, and better suited to modern fundraising practices. It includes a principles-based approach to help fundraisers apply high standards across various activities.
There are strengthened protections for donors, ensuring that their rights and well-being are prioritised during fundraising activities, and unsurprisingly, the new code includes updated standards for digital fundraising, addressing the evolving landscape of online and digital donation methods.
A list of changes can be found here, and a number of practical support guides have been published, focusing on areas such as documenting decisions, due diligence and monitoring partners.
Charity Commission guidance published on charities paying a trustee or a connected person (CC11)
The updated Charity Commission guidance (CC11), published in April 2025, provides clearer rules and risks associated with using charity funds to pay a trustee or a person connected to a trustee. Key areas of focus include:
- Types of payments.
- Payments to individuals connected to trustees (such as close relatives, business partners, or companies controlled by the trustee) are treated as payments to trustees.
- Charities must have the legal authority to make these payments.
- Any payment must be justified as being in the charity’s best interests.
- The updated guidance emphasises caution and careful justification for any payments to trustees or connected persons.
You can review the updated guidance here. Further guidance has also been published on trustee expenses, outlining what charities are permitted, and not, to cover. This includes clearer direction on allowable reimbursements and the limits. You can find more details here.
Trustee Finance Toolkit
The Charity Commission has launched a new interactive tool to help charities manage their finances. This toolkit includes:
- Financial Health Check: Tools and guidance to assess and improve your charity’s financial health.
- Internal Financial Controls: Information on implementing controls to protect your charity from fraud and financial loss.
- Reserve Policy: Guidance on developing and reporting your charity’s reserves policy.
- Improving Charity Finances: Advice on enhancing financial stability and managing financial difficulties.
- 15 Questions Trustees Should Ask: A guide to help trustees evaluate their charity’s financial effectiveness.
These resources aim to provide practical support and ensure that trustees have a clear understanding of their financial responsibilities.
Charity Commission annual return guidance
At the end of May 2025, the Charity Commission released new guidance for the annual return. The guide gives details of what questions will be asked. Whilst there are no significant changes to the questions, the guide provides reasons why they are collecting information from the questions introduced in 2023. You can learn more from the guide here.
As a reminder, you have 10 months from the year end to file your annual return, using the Charity Commission online services which can be found here.
Corporation Tax compliance
Charities often do not have a Corporation Tax liability due to favourable tax exemptions. However, they still fall within the requirement to submit Corporation Tax returns, if not on an annual basis, at least on a 3–6-year periodical basis.
All charities must complete a Company Tax Return if HMRC issues them with a ‘Notice to Deliver a Company Tax Return’ or they have income or gains which are not covered by a relief or exemption.
We have seen an increase in these requests being sent to our NFP and charity clients. It’s important that you do not ignore these and contact one of our tax advisers for support.
P11Ds
Benefits in Kind (BIK) or additional remuneration for employees may not be at the forefront of a charity’s mind. The retention of staff and therefore the remuneration packages offered may be such that a BIK arises, and the tax implications of benefits need to be taken into consideration. The deadline for BIK reporting is 6 July 2025.
Accommodation benefits may be chargeable on employees who are provided with living accommodation arranged by their employers, a common example being caretakers in schools. Although specific exemptions may apply, it is important to ensure the organisation is acting within the exemptions available.
Private health insurance, cycle-to-work schemes, the use of company assets, reimbursement of expenses such as mobile phone and internet costs, amongst many other possible benefits, all need to be taken into consideration when thinking about potential BIK.
We are here to help
If you need any support or advice in relation to the latest sector guidance, managing tax obligations or have any general questions, please get in touch with our charity sector team.
By Siobhan Holmes
Azets is a proud founding Corporate Partner to Surrey Hills Enterprises
