Charity reporting (SORP 2026) series – Part 3

Upcoming DCMS changes – what small charities need to know

This is Part 3 of our simple – Charity reporting (SORP 2026) series. 

Before we look at the changes, let’s start with a simple question:

Who or what is the DCMS, and why are they changing charity rules?

It’s not unusual for charities to say they’ve never heard of DCMS before.

The Department for Culture, Media and Sport (DCMS) is the government department responsible for charity policy in England and Wales.  They work closely with the Charity Commission, and many of the rules that charities follow; including reporting thresholds, are set by them.

How DCMS fits into the bigger picture:

• SORP tells you how to prepare your accounts.
• DCMS decides the legal thresholds that determine what kind of accounts you must prepare, and the level of scrutiny required.
• The Charity Commission enforces both.

So DCMS changes are not “extra”, they sit alongside SORP and shape what small charities need to file each year.

DCMS changes taking effect for financial years starting on or after 1 October

These changes apply when your next financial year begins after 30 September.
So if your year ends sometime after 30 September 2026, these changes will affect the subsequent set of accounts.

Here are the key updates most local and small charities need to know.

1. Receipts & Payments threshold is increasing

Old threshold: £250,000 income
New threshold: £500,000 income

This is a major change.

It means many more charities will be allowed to prepare Receipts & Payments (R&P) instead of accrual (SORP-compliant) accounts.

What this means in practice:

• Less complex year-end preparation
• Potentially lower examination costs
• Simpler record-keeping
• Less pressure on volunteer treasurers

If your charity is under £500,000 income, you may now be eligible to remain on (or move to) R&P.

2. Independent Examination (IE) threshold is increasing

Old threshold: £25,000 income
New threshold: £40,000 income

This means some very small charities:

• may no longer require an external scrutiny at all, or
• can opt for a simpler IE by a competent person (not necessarily a qualified accountant)

For volunteer-led charities, this is a welcome reduction in administrative burden.

3. Statutory audit thresholds are increasing

There are two key tests for audit:

A. Income threshold for audit

Old threshold: £1,000,000
New threshold: £1,500,000

B. Asset + income combination test

Old threshold:

• Assets over £3.26m
• AND income over £250,000

New threshold:

• Assets over £5,000,000

• AND income aligned to the new £500,000 R&P threshold

This means fewer mid-sized charities will be pushed into the cost and complexity of a full audit.

Why DCMS updated the thresholds

The aim is to:

• Reduce unnecessary burdens for small and medium-sized charities
• Ensure scrutiny is proportionate to risk
• Make annual reporting more manageable
• Support volunteer-led organisations
• Modernise thresholds that had become outdated

For many charities in our sector, these changes will make compliance simpler and less expensive.

4. Updated annual return requirements

Alongside threshold changes, DCMS has made updates to:

• the Annual Return questions
• governance information
• overseas payments disclosures
• beneficiary categories
• risk and operations data

This helps the Charity Commission better understand what charities do and how they operate.

Action: Review the new online Annual Return guidance before completing your next one.

What your charity should do now

Here’s a practical, simple list to get ahead:

• Identify your reporting tier (see Part 1)
• Review SORP 2026 changes (see Part 2)
• Check which new threshold your charity sits under
• Decide whether you can stay on (or move to) Receipts & Payments
• Talk to your independent examiner or accountant
• Inform trustees so everyone understands what’s changing
• Update your year-end timetable and documentation

Small steps now = much less stress later.

What’s next?

This completes our 3-part series designed to help local charities feel confident about what’s changing:

1. Part 1: What reporting tier is your charity? 
2. Part 2: SORP 2026: What local charities should start thinking about
3. Part 3: Upcoming DCMS Changes

About the Author

Aishat Idris is the Finance Manager at Support Cambridgeshire, responsible for the organisation’s financial management, and helping to build financial capacity across the local sector.  She is also the founder of BAnC Services, where she works with small charities and CICs to strengthen their day-to-day financial management, compliance, and governance, and undertakes independent examinations.