Guidance

Charity accounts: rules for charitable companies

Updated 16 September 2026

Applies to England and Wales

Read this guidance if your charity is a company.

Read different guidance if your charity is:

• a trust or unincorporated association
• a charitable incorporated organisation (CIO)
• an exempt charity

If your charity also operates in Scotland, read guidance on the accounting rules for Scottish charities you must also follow.

The Charities Statement of Recommended Practice (SORP) gives a framework for charity accounting and reporting.

1 January 2026 is the date from which the Charities Statement of Recommended Practice 2026 (SORP 2026) applies. Your charity must produce accounts that comply with SORP 2026, or a sector specific SORP. For example, registered providers of social housing will need to comply with the Housing SORP.

This guidance also sets out new accounting thresholds which apply for financial years ending on or after 30 September 2026.

If you are preparing accounts for a previous year, read the appropriate guidance.

1. The basic accounting and reporting rules

As a trustee you must make sure your charity is accountable. This is one of your legal duties. The trustee body as a whole is responsible for your charity’s financial management.  

Use this guidance to help you understand the type of accounts charitable companies must prepare, and for information on trustees’ annual reports.

These are the basic rules:

• all charities must prepare accounts and make these available to the public on request. This includes charities that are exempt or excepted from registering with the Charity Commission
• all registered charities must prepare a trustees’ annual report and make this available to the public on request

You can charge to cover the costs of making accounts or the trustees’ annual report available to the public

• all charities must keep financial records such as cash books, invoices, receipts and Gift Aid records for at least 6 years
• all charities must comply with anything their governing document says about financial management
• all registered charities must submit information yearly to the Charity Commission. Read guidance to find out what information your charity needs to submit

All charitable companies must submit information yearly to Companies House.    

Read Companies House guidance.

There may be other rules your charity must comply with. Read guidance on tax exemptions for charities and on tainted charity donations.

Get professional advice if you need help preparing your charity’s accounts or trustees’ annual report.

2. What type of accounts to prepare

All charitable companies must prepare accruals accounts.

2.1 What are accruals accounts

Accruals accounts must give a true and fair view. They must contain:

• a balance sheet showing the charity’s financial position at the end of the financial year, and
• a statement of financial activities which shows for that financial year:
  • all money received or due to the charity and
  • all money spent or incurred by the charity, and
• explanatory notes

Charitable companies must prepare an income and expenditure account. You can adapt the Statement of Financial Activities to include this. For guidance on how to do this read SORP 2026.

Make sure your accounts are true and fair by complying with SORP. If your charitable company is preparing accruals accounts for financial years beginning on or after 1 January 2026, your accounts must comply with SORP 2026, or a sector specific SORP. For example, registered providers of social housing will need to comply with the Housing SORP.

For charities complying with SORP 2026 the amount of detail you provide will depend on what tier you are in.

2.2 What does gross income mean

Use the information in your charity’s accounting records to work out the gross income.   

2.3 Gross income

For charities preparing accruals accounts gross income is the total income as shown in the Statement of Financial Activities for all funds excluding the receipt of any endowment funds.

Endowment funds are funds received by the charity to be held as capital and used for the charity’s purposes. This includes permanent endowment which is property your charity must keep rather than spend.

Expendable endowment is a capital fund which allows the trustees to convert the fund to income.

You must include any endowment funds which have been transferred to income funds during the year and are now available for spending.

3. When accounts need an independent examination or audit

These are checks to provide an independent review of the charity’s accounts.

3.1 Independent examination

An independent examination is a less in depth review than an audit. It is often chosen by smaller charities and focuses on ensuring accounts match the charity’s records.

For financial years ending before 30 September 2026

Gross income £25,000 or less	There is no requirement to have an independent examination or audit - unless your articles of association say you must or a funding agreement requires one or the other.
Gross income over £25,000 and up to £1 million	You can choose to have either an independent examination or an audit - unless your articles of association or a funding agreement requires an audit.
Gross income over £250,000 and up to £1 million	If you have an independent examination this must be carried out by a member of a body specified under the Charities Act 2011.

For financial years ending on or after 30 September 2026

Gross income £40,000 or less	There is no requirement to have an independent examination or audit - unless your articles of association say you must or a funding agreement requires one or the other.
Gross income over £40,000 and up to £1.5 million	You can choose to have either an independent examination or an audit -unless your articles of association or a funding agreement requires an audit.
Gross income over £500,000 and up to £1.5 million	If you have an independent examination this must be carried out by a member of a body specified under the Charities Act 2011.

Read guidance on independent examination.

Charitable companies that are required to have an audit under the Charities Act 2011, but which do not require an audit under the Companies Act 2006, must include a statement on the balance sheet that the company is exempt from a Companies Act audit.

Read Companies House guidance on Companies Act audits and on the format of the statement.

3.2 Audit

An audit is an in-depth review of the charity’s accounts and gives an opinion on whether the accounts are true and fair.

For financial years ending before 30 September 2026

Gross income more than £1 million or Gross income more than £250,000 and gross assets more than £3.26 million

You must have an audit by a registered auditor.

For financial years ending on or after 30 September 2026

Gross income more than £1.5 million or Gross income more than £500,000 and gross assets more than £5 million

You must have an audit by a registered auditor.

You can search for an auditor on the Register of Statutory Auditors.

The Charity Commission can require an audit of your charity’s accounts in cases where there may be misconduct or mismanagement.

Some charitable companies must have an audit under the Companies Act 2006. Charitable companies that are exempt from a Companies Act audit must include a statement on the balance sheet

Read Companies House guidance on Companies Act audits and on the format of the statement.

Read an example of how charities could benefit from these threshold changes.

4. Preparing group accounts (also known as consolidated accounts)

Read this section if your charitable company is:

• a parent charity and has one or more subsidiaries, and
• classed as a small group under the Companies Act

Read Companies House guidance if your charitable company is:

• a parent charity and has one or more subsidiaries, and
• classed as medium or large group under the Companies Act 2006

A subsidiary is an organisation that the parent charity owns and controls, for example a trading company.

‘Group’ means the parent charity and all the subsidiaries.

All charities in a group must prepare individual accounts.

4.1 For financial years ending before 30 September 2026

Gross income of the group exceeds £1 million after removing any transactions between any of the organisations in the group	The parent charity must prepare accruals accounts which must comply with SORP 2019 (or SORP 2026 if trustees have chosen to adopt it early). The accounts must be audited by a registered auditor.
Gross income of the group is £1 million or less	You can choose to prepare group accounts. These are known as ‘non statutory accounts’ as there is no legal requirement to prepare them. They can only be filed with the Charity Commission if certain requirements are met.

4.2 For financial years ending on or after 30 September 2026 

Gross income of the group exceeds £1.5 million after removing any transactions between any of the organisations in the group	The parent charity must prepare accruals accounts which must comply with SORP 2026. The accounts must be audited by a registered auditor.
Gross income of the group is £1.5 million or less	You can choose to prepare group accounts. These are known as ‘non statutory accounts’ as there is no legal requirement to prepare them. They can only be filed with the Charity Commission if certain requirements are met.

Read an example of how charities could benefit from these threshold changes.

5. Trustees’ annual report

Trustees of all charities must produce annual accounts and trustees of all registered charities must also prepare a trustees’ annual report.

The annual report is an important milestone, an opportunity to take stock of how the year has gone compared to your plans. The report is a chance to bring the accounts to life, help you celebrate successes and explain any challenges and your future plans.

All charities must include basic information which is mandatory. Smaller charities provide less information. The amount of detail you provide will depend on what tier you are in for the purposes of SORP 2026.

Charitable companies must also prepare a directors’ report, which can be combined with the trustees’ annual report. Medium and large charitable companies must prepare a strategic report.

Find out what information to put in your trustees’ annual report.

6. Using electronic signatures

An electronic signature can be a typed or a scanned version of a handwritten signature.

Check your charity’s articles of association and follow what they say about using handwritten or electronic signatures.

If they do not say anything, you can use electronic signatures for documents like balance sheets, accounts, trustees’ annual reports and the independent examiners’ report.

This includes copies you keep, and copies (of accounts and annual reports) you send to the Commission. 

7. Including personal information in your accounts and annual report

The Charity Commission publishes charity accounts and annual reports on its register and they are accessible to everyone. The Commission cannot remove personal data and can only redact data in very limited circumstances.

You must comply with UK GDPR rules on publishing personal information. Check carefully that any personal data you include in your accounts and annual report is necessary, fully justified and not excessive. 

See our annual return privacy notice for information on what personal data to include in your annual return and accounts and how the Charity Commission processes this.

8. Examples

The new accounting and reporting changes apply to financial years ending on or after 30 September 2026. Below are some examples of how charities could benefit from the changes.

Example 1

Charity A is a charitable company and has a financial year end of 30 November. For the financial year ending 30 November 2025 the charity had a gross income of £1.1 million. Under the thresholds that apply for that financial year the accounts had to be audited.

The trustees anticipate that for the financial year ending 30 November 2026 the gross income will be £1.4 million.

Under the new thresholds, which apply to financial years ending on or after 30 September 2026, the trustees can choose to have the accounts examined by a professionally qualified independent examiner  rather than audited.

Example 2

Charity B is a charitable company and is the parent company of a number of subsidiary trading companies. The parent charity and subsidiaries have a financial year end of 31 December.

For the financial year ending 31 December 2025 the aggregate income of the parent company and subsidiaries (the ’group’) is £1.3 million. Under the thresholds that apply for that financial year, the parent company must prepare group accounts (also known as consolidated accounts) which must be accruals accounts and must be audited.

The trustees of charity B anticipate that for the financial year ending 31 December 2026 the aggregate income of the group will increase to £1.4 million.  Under the new thresholds, which apply to financial years ending on or after 30 September 2026, the trustees would not be required to produce group accounts.

9. Further guidance

Find out what information you need to send to the Charity Commission.

Read guidance from Companies House to understand what you must submit to them.

This table sets out all the accounting thresholds before and after 30 September 2026.

Use this accounts tool if you need further help to understand what accounts to prepare.

10. Legal note

The requirement for charities to produce accounts is in section 132 of the Charities Act 2011.

The requirement to prepare group accounts is in section 138 of the Charities Act 2011 and The Charities Act 2011 (Group Accounts) Regulations 2015.

The requirement for companies to produce accounts is in section 394 of the

Companies Act 2006.

The requirement for company accounts to give a ‘true and fair view’ is in section 393(1) of the Companies Act 2006.

The power for the Charity Commission to dispense with the requirement for accounts to be audited or independently examined is in section 154 of the Charities Act 2011 and The Charities (Accounts and Reports) Regulations 2008.

Read guidance on dispensations.

The requirement to prepare and submit an annual report is in section 162 of the Charities Act 2011.

The option to obtain an independent examination is in section 145 of the Charities Act 2011.

If you choose an independent examination, (read relevant guidance above) the independent examiner must be a member of a body specified under the Charities Act 2011. They are:

• a Fellow of the Association of Charity Independent Examiners
• a Member of the Institute of Chartered Accountants in England and Wales
• a Member of the Institute of Chartered Accountants of Scotland
• a Member of the Institute of Chartered Accountants in Ireland
• a Member of the Association of Chartered Certified Accountants
• a Member of the Association of Authorised Public Accountants
• a Member of the Association of Accounting Technicians
• a Member of the Association of International Accountants
• a Member of the Chartered Institute of Management Accountants
• a Member of the Institute of Chartered Secretaries and Administrators
• a Member of the Chartered Institute of Public Finance and Accountancy
• a Member of the Institute of Financial Accountants
• a Member of the Certified Public Accountants Association