The rise is real. The Charity Commission's guidance confirms that for financial years ending on or after 30 September 2026, an England and Wales charity needs an independent examination only if its gross income is over £40,000, up from £25,000. A charity with income of £40,000 or less needs neither an examination nor an audit, unless its governing document or a funding agreement says otherwise. An audit by a registered auditor is required if gross income is over £1.5m, or if gross income is over £500,000 and gross assets are over £5m.
This guide sets out the thresholds side by side, explains which year-end date decides which set applies, and covers the points that catch trustees out: the thresholds that did not move, the governing document, and who is allowed to carry out the examination.
What the Commission's guidance confirms
The Charity Commission's press release states that the threshold for having accounts checked by an independent examiner rises from £25,000 to £40,000 for financial years ending on or after 30 September 2026. The Commission's own table of threshold changes sets out the same figures, and its separate guides for charitable companies and for charitable incorporated organisations (CIOs) carry the old and new figures side by side.
The Commission says the changes were introduced by the Department for Culture, Media and Sport (DCMS) following a public consultation, that they came into effect on 30 September 2026, and that they apply to accounting years ending on or after that date. DCMS's consultation response had proposed £40,000 as the inflation-based figure, and 55% of respondents supported it. ICAEW also reports that DCMS has confirmed the 30 September 2026 start.
The government said it would make the change by secondary legislation. The Commission's guidance is the authority for the figures used here. If you need the exact legal wording, read the amending regulations themselves.
The Commission's guidance for each structure type is the right place to check your own position. It now has one guide for each of the three main structures: a trust or unincorporated association, a charitable company, and a CIO.
The thresholds side by side
These apply to charities in England and Wales. The figures in the Commission's guidance are measured against gross income, and, for the audit's second limb, gross assets.
| Scrutiny | Years ending before 30 September 2026 | Years ending on or after 30 September 2026 |
|---|---|---|
| No examination or audit needed (unless governing document or funder requires one) | Income of £25,000 or less | Income of £40,000 or less |
| Independent examination | Income over £25,000 | Income over £40,000 |
| Examiner must be a member of a specified body | Income over £250,000 and up to £1m | Income over £500,000 and up to £1.5m |
| Audit by a registered auditor | Income over £1m, or income over £250,000 and assets over £3.26m | Income over £1.5m, or income over £500,000 and assets over £5m |
| Choice of receipts and payments accounts (non-company charities only) | Income up to £250,000 | Income up to £500,000 |
The audit test has two limbs. The first is income alone: over £1.5m. The second applies only if income is over £500,000 and, in addition, gross assets are over £5m. A charity with £2m of assets and £700,000 of income does not meet the second limb. ICAEW notes that the income figure attached to the asset test has been doubled, from £250,000 to £500,000. It also says the £500,000 figure was chosen to line up with the Tier 1 limit in the new Charities SORP, which is the accounting standard for charities. SORP 2026 applies to reporting periods starting on or after 1 January 2026 and has three tiers: Tier 1 for income up to £500,000, Tier 2 for £500,000 to £15m, and Tier 3 above £15m.
The year-end decides which thresholds apply
The test is the date the financial year ends, not the date it starts. The new thresholds apply to financial years ending on or after 30 September 2026. A year ending on 29 September 2026 uses the old figures. A year ending on 30 September 2026 uses the new ones, even though most of that year was lived under the old rules.
The Commission's CIO guidance gives a worked example. A CIO with income of £35,000 in the year ending 31 October 2025 had to be independently examined. If its income for the year ending 31 October 2026 is between £35,000 and £38,000, it does not have to get the accounts examined under the new thresholds. The Commission's examples assume the governing document is silent on the point, so check yours before relying on this.
A second example in the guidance for charitable companies covers the upper end. A charitable company with gross income of £1.1m that had its accounts audited for the year ending 30 November 2025 expects £1.4m for the year ending 30 November 2026. The trustees can choose to have the accounts examined by a professionally qualified independent examiner rather than audited.
How to measure gross income
For a charity preparing accruals accounts, the Commission defines gross income as the total income shown in the Statement of Financial Activities for all funds, excluding the receipt of any endowment funds. Endowment funds that are transferred to income funds during the year and are now available for spending must be counted.
An endowment fund is money the charity has received to hold as capital and use for its purposes. A large endowment gift received in the year does not push the charity over a threshold, but spending from an endowment that has been released to income does count.
ICAEW's advice is to review projected income and asset levels for the current financial year now, so you know where the charity sits relative to the new figures.
What did not change
Two other thresholds stay where they were, and the Commission and DCMS both say this creates something to watch.
- The annual return stays at income over £10,000.
- Sending the trustees' annual report and accounts to the Commission stays at income over £25,000.
The examination threshold is therefore no longer the same as the threshold for sending the report and accounts. A charity with income between £25,000 and £40,000 must still send its trustees' annual report and accounts to the Commission, but it does not need an independent examination, unless its governing document or a funding agreement requires one. DCMS acknowledged that this creates an additional threshold for small charities to be aware of.
Your governing document and funders can ask for more
The thresholds are a statutory minimum. The Commission says plainly that a charity with income below them does not need an examination or an audit unless its governing document says it should. For charitable companies, the Commission names the articles of association and any funding agreement. A funder may require an examination or an audit regardless of income.
The Commission can also require an audit of a charity's accounts where there may be misconduct or mismanagement.
Before you decide that a charity no longer needs an examination, read the governing document and any funder agreements. A constitution that says the accounts must be independently examined every year still says so after 30 September 2026. Changing it is a decision for the trustees under the governing document's own amendment procedure.
Independent examination or audit: the difference
The Commission describes an independent examination as a less in-depth review than an audit. It is often chosen by smaller charities and focuses on ensuring the accounts match the charity's records. An audit is an in-depth review that gives an opinion on whether the accounts give a true and fair view.
In practice the examiner does not give a positive opinion. They state whether anything has come to their attention, such as a lack of accounting records, that needs to be reported. This is sometimes called negative assurance.
Cost is the reason the thresholds matter. Respondents to the government's consultation quoted examiner fees of between £400 and £1,500. Audit costs quoted ranged from £5,000 to £19,000. DCMS estimated that raising the examination threshold relieves about 11,000 charities of the examination requirement, saving about £7.8m a year. For a charity with £30,000 of income, a fee of £1,500 is a meaningful share of what it raises.
Who can carry out an independent examination
The trustees have a statutory duty to appoint an independent person who is reasonably believed by the trustees to have the requisite ability and practical experience to carry out a competent examination of the accounts. The skills needed depend on the charity's income and complexity.
For charities with gross income over £500,000 and up to £1.5m, the examiner must be a member of a body specified under the Charities Act 2011. Before the change the band was over £250,000 and up to £1m. The Commission's list of specified bodies includes:
- the Association of Charity Independent Examiners (fellows)
- ICAEW, ICAS and Chartered Accountants Ireland
- ACCA, AAPA, AAT and AIA
- CIMA, ICSA and CIPFA
- IFA and CPAA
Below that band the examiner does not have to be professionally qualified. The Commission's CIO example confirms that a CIO with £315,000 of income must still have an independent examiner, but not a professionally qualified one. Law firm Browne Jacobson says a qualified examiner is strongly recommended for charities preparing accruals accounts below that threshold.
Independence
The examiner must be independent. Situations that could call independence into question include being an employee or bookkeeper of the charity, serving on a finance sub-committee, being a major donor or beneficiary, or having a significant financial or commercial relationship, or a close personal relationship, with the trustees. If your usual bookkeeper is also your examiner, that needs to change.
Allow time to appoint someone. The first year-end after the change is a busy one for examiners.
Charitable companies: an extra layer
A charitable company is a charity that is also a company, and it has two sets of rules.
- It must always prepare accruals accounts. Only non-company charities, which means unincorporated charities and CIOs, can choose receipts and payments accounts.
- Some charitable companies must still have an audit under the Companies Act 2006.
- A charitable company that is exempt from a Companies Act audit but needs a Charities Act audit or examination must put a statement on the balance sheet that it is exempt from a Companies Act audit.
The option to obtain an independent examination is in section 145 of the Charities Act 2011. The accounts requirement is in section 132, the group accounts requirement in section 138, and the Commission's power to dispense with an audit or examination in section 154.
Groups
The group trigger also rises, from £1m to £1.5m. A parent charity whose group gross income, after removing transactions between members of the group, exceeds £1.5m must prepare SORP 2026 accruals group accounts and have them audited by a registered auditor. At or below that figure, group accounts are optional. A group means the parent charity and its subsidiaries, such as a trading company it owns and controls.
What trustees should do now
Browne Jacobson sets out a sensible order of checks.
- Check the year-end date. A year ending on or after 30 September 2026 uses the new figures.
- Review the type of accounts and the level of scrutiny you currently have.
- If income previously sat just above a threshold, work it out again.
- Read the governing document and funder agreements. They may be stricter.
- If an auditor is in post and income is now below £1.5m with assets under the second limb, discuss whether to switch to an examination.
- Allow time to appoint an examiner.
The Commission's trustee guidance on independent examination, CC31, still carries a banner saying that its figures apply to financial years ending before 30 September 2026. Use the new guide for your structure for current figures.
The Commission says to get professional advice if you need help preparing the accounts or trustees' annual report. If you want help with a small charity's accounts and examination, Deplexify's charities service covers charity accounts and independent examination.
Frequently Asked Questions
Has the independent examination threshold risen to £40,000?
Yes, for financial years ending on or after 30 September 2026. The Charity Commission's guidance and press release both give £40,000, up from £25,000.
Does a charity with £30,000 of income need an examination?
Not under the statutory thresholds, for a year ending on or after 30 September 2026. It still needs one if its governing document or a funding agreement says so.
Does a charity under £40,000 still send its accounts to the Commission?
If its income is over £25,000, yes. The threshold for sending the trustees' annual report and accounts to the Commission is unchanged at £25,000. The annual return threshold is also unchanged, at income over £10,000.
When does a charity need an audit?
When gross income is over £1.5m, or gross income is over £500,000 and gross assets are over £5m. Before the change the figures were £1m, or £250,000 and £3.26m.
Does the examiner have to be an accountant?
Only above £500,000 of gross income, where the examiner must belong to a body specified under the Charities Act 2011. Below that the examiner must be independent and have the ability and practical experience to do the work.
Sources
- Threshold changes at a glance - GOV.UK — gov.uk, read 2026-10-18
- Changes to charity accounting and reporting - GOV.UK — gov.uk, read 2026-10-18
- All charities urged to check new rules for accounting for 2026 - GOV.UK — gov.uk, read 2026-10-18
- Consultation on financial thresholds in charity law: government response - GOV.UK — gov.uk, read 2026-10-18
- Charity accounts: rules for charitable companies - GOV.UK — gov.uk, read 2026-10-18
- Charity accounts: rules for Charitable Incorporated Organisations (CIOs) - GOV.UK — gov.uk, read 2026-10-18
- New financial thresholds: effective 30 September 2026 | ICAEW — icaew.com, read 2026-10-18
- Charity accounting thresholds 2026 | What trustees must know — brownejacobson.com, read 2026-10-18
- Examination of accounts | Resource Centre — resourcecentre.org.uk, read 2026-10-18
- Independent examination of charity accounts: guidance for trustees (CC31) - GOV.UK — gov.uk, read 2026-10-18