If you're involved with a charity - whether you're on the board, manage the accounts, or provide support behind the scenes - you may have heard that there are some changes coming to the way charities report their finances.
The biggest step in that process has been completed with the consultation into the new Charities Statement of Recommended Practice (SORP) now closed. Over 140 stakeholders submitted their views, and these are now being analysed to help shape the final version of the guidance.
So, what should charities be doing in the meantime?
✅ When Will the New SORP Apply?
The updated SORP is expected to be published in October 2025. It will apply to financial years starting on or after 1 January 2026.
So, if your charity’s financial year runs from January to December, you'll be using the new SORP from January 2026. If your year starts in another month, the changes will kick in at the beginning of whichever month starts your 2026/27 financial year.
❓ What Should You Do Now?
While the full guidance won’t be finalised until October, the Charity Commission are urging charities to get ready for the changes the Financial Reporting Council introduced on lease accounting and revenue recognition.
Those changes involve:
- Lease accounting: There are changes to how leases are reported in the accounts. Most leases will now appear on the Balance Sheet, although there are some exceptions.
- Revenue recognition: This is all about when income is recognised in your accounts. The new rules may change how you account for grants, donations, contracts, and trading income - particularly where there are conditions attached.
For more info, see https://www.gov.uk/government/publications/charity-commission-news/charity-commission-news-july-2025