Receipts & Payments - The New Thresholds

Mon, 23 Mar 2026 16:34:47 GMT

A quiet shift with big consequences

From late 2026, the UK charity accounting landscape will change in a way that, on paper, looks like simplification - but in practice raises serious questions about transparency and oversight. The headline change is this:

Non-company charities in England & Wales will be able to prepare receipts and payments accounts up to £500,000 income , up from the long-standing £250,000 threshold.

At the same time, other thresholds are also increasing:

Independent examination threshold: £25,000 → £40,000
Professional examiner requirement: £250,000 → £500,000
Audit threshold: £1m → £1.5m (for most)

These changes are expected to apply to accounting periods ending on or after 1 October 2026 . On the surface, this is framed as “reducing administrative burden”. In reality, it shifts a significant chunk of the sector into a much lighter-touch reporting regime.

What this actually means

Receipts and payments accounts are, bluntly, cash accounting :

No accruals
No balance sheet in the true sense
Limited insight into liabilities, commitments, or financial position

That may be entirely appropriate for a £20k village hall. It is far less obvious that it is appropriate for a charity with £500,000 of annual income . Let's be honest here, even the old £250,000 threshold raises issues when it comes to complexity.

A charity operating at £500k income is not small in any meaningful sense:

It is likely to have staff
It may have restricted funds and multiple income streams
It may enter into contracts, leases, and grant agreements
It will almost certainly have timing differences that cash accounting obscures

Allowing organisations of this scale to step away from accruals accounting creates a mismatch between economic reality and reported figures .

Put simply: you can have a half-million-pound organisation presenting accounts that do not properly show what it owes or what it is committed to.

The inconsistency becomes more obvious when you look across borders.

In Scotland , the receipts and payments threshold remains at £250,000 .
Until recently, Scotland also required audit at £500k income (now increased to £1m from 2026, but still reflecting a more cautious approach historically).

So we now have a position where:

One regulator considers £250k the point at which accruals become necessary and, until recently, required an audit
Another allows cash accounting up to £500k

That is not a marginal difference, it is a fundamentally different view of risk and complexity .

The real issue is transparency, not admin. The justification for these changes is cost and proportionality. That is understandable, but it misses the point.

Charity accounts are not just a compliance exercise. They are:

A public transparency document
A key tool for trustees to understand their own finances
A signal to funders, donors and regulators

Reducing the quality of information at higher income levels does not just reduce admin, it reduces visibility .

And crucially, many of the costs of accruals accounting are already being incurred:

Bookkeeping systems
Payroll
Grant tracking
Management reporting

Switching to receipts and payments does not remove complexity, it just removes how clearly it is reported.

There is also a more subtle risk - behavioural risk. By raising the threshold:

Charities just below £500k may feel pressure to avoid “tipping into accruals”
Trustees may opt for the simpler route , even where it is not appropriate
The sector risks drifting towards minimum compliance rather than best practice

Even the guidance accompanying the changes acknowledges that trustees should consider whether moving to receipts and payments is actually appropriate. That caveat matters, because legality and suitability are not the same thing.

From a practitioner perspective, this change is difficult to reconcile. A £500k charity:

Is operationally complex
Has stakeholders relying on its accounts
Should be reporting on a true and fair basis

Allowing receipts and payments at that level risks:

Misstated financial positions
Poor decision-making by trustees
Reduced confidence from funders and the public

In short: the threshold may be legal, but it does not feel proportionate.

Final thought

There is a clear logic to increasing thresholds in line with inflation. But doubling the receipts and payments limit goes beyond that. It changes the nature of financial reporting for a large part of the sector. If two parts of the UK can look at the same £500k charity and reach completely different conclusions about the level of scrutiny required, then something is off. And that, more than anything, is the concern

Charity audit thresholds: what’s changed, what hasn’t, and when it matters

Thu, 12 Feb 2026 15:15:32 GMT

Charity audit thresholds in England and Wales: what you need to know

Where we’ve been

Since 2015 , the audit thresholds for charities in England & Wales have been:

Audit required if income exceeds £1 million , or
Audit required if income exceeds £250,000 and gross assets exceed £3.26 million

Those figures have stayed completely unchanged for over a decade. In real terms, that meant more charities drifting into audit simply because of inflation, not because they’d become more complex or risky. If your charity falls below the audit threshold, an independent examination may be required instead - and that is naturally much simpler.

What’s changing

Following a government review, those thresholds are now being increased:

Income audit threshold: £1 million → £1.5 million
Asset-based audit trigger (where income exceeds £500k): £3.26 million → £5 million

These are legal changes, not accounting or SORP changes.

When it matters

This is the bit that often gets misunderstood. The new thresholds apply to financial years starting on or after 1 October 2026 . So, for example:

A charity with a 31 March year end won’t see any change until the year ending 31 March 2028 .
Accounts for 31 March 2027 are still firmly under the old rules.

There’s no early adoption and no choice about timing — it’s purely date-driven.

A final reality check

Even where a charity falls below the new thresholds:

Trustees can still choose to have an audit
Funders or governing documents may still require one

So this isn’t about audits disappearing — it’s about making the statutory requirement more proportionate.

Bottom line:
Audit thresholds have been stuck since 2015. They’re finally being updated — but most charities won’t feel the impact until 2027/28 at the earliest.

If you’re unsure whether your charity requires an audit or independent examination, feel free to get in touch to discuss your situation.

K-VS Blog