What is the Charities SORP and which tier am I?

Applies in: England and Wales · Scotland · Northern Ireland

The SORP sets the tiers to be identical in all jurisdictions of regulation. What differs is which statutory thresholds sit alongside them.

The Charities SORP and its tiers are the same in England and Wales, Scotland and Northern Ireland. That holds whether the charity reports to the Charity Commission, OSCR or the Charity Commission for Northern Ireland. For trustees, the tier is worth getting right. But know from the start how little it buys.

What does SORP tiering relax?

Tiering operates in five of the SORP’s modules only — Modules 1, 4, 8, 9 and 14. It is the headline simplification of the 2026 SORP, so it is easy to assume it runs through the whole document. It does not. Everything else applies in full whatever your size (SORP 2026 Appendix 4 B.25).

The SORP-making body says why, in terms: it “cannot provide an exemption from a requirement of FRS 102”. It can add requirements and tier those. It cannot take away what the financial reporting standard requires.

This SORP brings two big new accounting changes: lease accounting and income recognition. Because the SORP cannot take away what FRS 102 requires, both apply in full to the smallest accruals charity in the country. A village hall with one photocopier lease and one grant is inside both.

On leases, one point needs saying plainly, because the opposite is widely published: there is no monetary threshold for the low-value exemption. The FRC says so expressly. Its Factsheet 11 states that Section 20 “does not specify a particular value threshold”.

Any source quoting a pound figure for “low value” is wrong. The short-term exemption is defined by duration instead — a lease term of 12 months or less at the commencement date.

For a charity in the smallest tier, the 2026 SORP is not, on balance, a simplification. It brings:

• one relaxation, kept from the previous SORP rather than new, in how the statement of financial activities may be presented
• several new or tougher duties in the trustees’ annual report
• two big accounting changes that are not tiered and apply whatever your size

Module 14 is the one place the 2026 SORP lifts a duty, and it lifts it from the middle tier, not the smallest. The SORP requires only a Tier 3 charity to prepare a statement of cash flows. The previous SORP’s own threshold was the Tier 1 ceiling, so a Tier 1 charity never had to prepare one. A Tier 1 or Tier 2 charity that is not a small entity under FRS 102 may still have to prepare one under that standard.

How is your tier determined?

Your tier is determined by three features of the test, and each catches somebody out.

• Income only. Tier is assessed on annual gross income and nothing else. The other small-company tests — staff numbers and total assets — are expressly left out of the tier test. They still matter separately for the cash flow statement exemption.
• Every year, with no smoothing. The SORP requires a charity to reassess its tier each year on that year’s gross income. Company law smooths size changes across two years in a row, and accountants expect the same here. The SORP does not do it. A charity near a boundary will flip, and its comparatives will have been prepared on a different basis. A two-year rule was proposed in consultation. The SORP-making body “concluded that this would not be the right choice at this time”. It did not reject it on the merits, and it has promised to consult further. This may change.
• Cumulative, not banded. The SORP requires Tier 2 charities to comply with the Tier 1 requirements and the Tier 2 ones. Tier 1 is not a shortened Tier 2. It is the base everyone builds on. SORP 2026 Module 1 sets out what each tier adds. The reporting hub explains it at Establish which tier you are in and what your report must contain.

A subsidiary charity assesses its own tier on its own gross income, independently of its parent’s.

Tier boundaries and the legal thresholds

The tier boundaries are not the legal thresholds, even where the figures match. In England and Wales, from the 2026 effective date, the Tier 1 ceiling happens to match the accruals boundary and the qualified-examiner threshold. That match makes them look like one rule. They are three separate regimes with three separate sources and, worse, three separate effective bases.

The match does not exist in Scotland or Northern Ireland at all. Take a Scottish charity above its own accruals threshold but below the Tier 1 ceiling. It must prepare accruals accounts as a Tier 1 charity. An otherwise identical England and Wales charity that is not a company could opt out of the SORP entirely by choosing receipts and payments.

The England and Wales receipts and payments ceiling is £250,000 for financial years ending before 30 September 2026; £500,000 for financial years ending on or after 30 September 2026. The Scottish one is £250,000 and did not move.

Do not use the threshold table in the SORP’s own appendix. It was published before the England and Wales order was made and states the old figures.

The same is true of the SORP’s signpost at paragraph 35 for non-company charities choosing receipts and payments accounts. Both are already out of date for England and Wales. Both still give the figure Scotland and Northern Ireland use.

Which of your years does the 2026 SORP first affect?

The SORP applies to reporting periods beginning on or after its effective date, 1 January 2026. The England and Wales statutory thresholds apply to financial years ending on or after theirs, 30 September 2026. Scotland’s own thresholds move on a period-beginning basis, on a different date again.

They were announced together and are discussed together, but they use opposite bases. So some year ends get the new statutory thresholds while still preparing under the old SORP. Work the three questions separately for the year in front of you:

• the England and Wales thresholds apply to financial years ending on or after 30 September 2026
• the SORP applies to reporting periods beginning on or after 1 January 2026
• the Scottish thresholds apply to financial years beginning on or after 1 January 2026

No regulator has published a table putting the three side by side.

Early adoption is unresolved and you should not rely on it. The SORP permits early adoption. But it rules it out in any jurisdiction where regulations name the SORP that applies, until those regulations are amended.

Scotland has amended them. SSI 2025/341 substitutes the October 2025 edition into the Scottish definition of “the SORP” for years beginning on or after 1 January 2026. For England and Wales and for Northern Ireland, no instrument or regulator statement confirming it was found. Treat early adoption there as unavailable until someone says otherwise.

Is impact reporting required of the smallest charities?

Not as a SORP requirement at Tier 1, though the SORP asks trustees to consider it.

At every tier, the SORP requires “a summary of the main achievements of the charity”. At Tier 1, questions about the difference the work made “should be considered” by trustees. A should that is not followed is not a departure from the SORP.

From Tier 2, under the heading “Tier 2 – in addition to tier 1 requirements”, the SORP reads: “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”.

So the position is:

• the SORP requires a summary of main achievements at every tier
• it requires an explanation of impact from Tier 2
• at Tier 1 it says trustees should consider the difference the work made, and encourages them to include Tier 2 information they consider relevant

How to write it is in write your impact report.

What the tier changes in the trustees’ annual report

Tier 1 asks more than the equivalent under the previous SORP. Two additions catch small charities in particular. The SORP now requires the report to:

• explain the scale and nature of volunteer activity and input
• summarise the charity’s plans for the future

The reserves rules tighten as well. Where the reserves figure in the report is not evidently consistent with the accounts, the SORP requires a reconciliation (see calculate your free reserves). That duty sits at Tier 1, with no way out for small charities.

The full tier-by-tier content list is SORP 2026 Module 1. The reporting hub covers it: Establish which tier you are in and what your report must contain. Read it there rather than working from a summary.

Sources

1. Charities SORP 2026 (October 2025), paragraphs 21, 35, 37, 38, 39, 1.27, 1.30, and Appendix B.22–B.25 — charitysorp.org
2. Charities SORP 2026 — Summary of Changes — charitysorp.org
3. Charities SORP 2026, Module 1 — Trustees’ annual report — charitysorp.org
4. FRC, FRS 102 Factsheet 11 — Lease accounting for lessees (November 2024) — frc.org.uk
5. Amendments to FRS 102 and other FRSs — Periodic Review 2024 — frc.org.uk
6. The Charities Accounts (Scotland) Amendment Regulations 2025 (SSI 2025/341), reg 3(2) — legislation.gov.uk
7. The Charities Acts 1992 and 2011 (Substitution of Sums) Order 2026 (SI 2026/427), art.5(6) — legislation.gov.uk

What to do about it

• Step 14 — Determine your SORP tier. Record the determination for the reporting period, with the gross income figure you used. Getting the tier wrong is a SORP compliance failure, and it leads to a modified scrutiny opinion. That is because the accounts regulations require the accounts to follow the methods and principles of the SORP.
• Step 30 — Transition to the Charities SORP 2026, once you know which of your years is the first affected. Start well before that year end: the lease exercise takes longest.

If you are still deciding whether the SORP applies to you at all, start with Step 12 — Determine which type of accounts you must prepare.