What reporting tier is your charity?

A simple guide for small charities & community groups

Before talking about SORP 2026 and the upcoming changes, is important to determine the type of accounts your charity needs to prepare – many local charities are unsure which rules apply to them.

This blog breaks down the reporting tiers so you can confidently say – “Yes, this is where our charity fits.”

Tier 1: Receipts & Payments (R&P)

Your charity is Tier 1 if:

• your annual income is under £250,000, and
• you are allowed to prepare Receipts & Payments Accounts.

This is the simplest kind of year-end report.

It shows:

• money received
• money spent
• funds held at year-end
• plus a basic Trustees’ Annual Report.

Tier 1 charities still need clear documentation, but the reporting is lighter than accrual accounts.

Tier 2: Accrual Accounts (SORP-compliant)

Your charity is Tier 2 if:

• you prepare accrual accounts, and
• you follow the Charity SORP (Statement of Recommended Practice).

This is common for:

• CIOs
• charitable companies
• charities required by funders to use accrual accounting
• organisations that want a clearer financial picture.

Also, you could be deemed to be in Tier 2 based on income: the current threshold being income over £250,000.  Below this threshold, charities can normally choose to stay on Receipts & Payments unless another requirement applies.

Accrual accounts include:

• a SOFA (Statement of Financial Activities)
• a balance sheet
• notes to the accounts
• more detailed disclosures.

Many charities in our sector fall into Tier 2 without realising it.

Tier 3: Larger or More Complex Charities

You are in this category if you:

• exceed the statutory audit threshold, or
• have higher-risk activities, subsidiaries, or more complex funding.

These charities follow the full SORP with more detailed reporting and disclosures.

Why does this matter?

Because SORP 2026 affects each tier differently.

Understanding your tier helps you:

• know which rules apply to you
• prepare the right type of accounts
• understand what will change when the new SORP begins
• support your trustees to make informed decisions
• improve compliance and reduce stress at year-end.

What’s Next?

In Part 2, we break down what SORP 2026 means for your charity.

If you’re unsure where your charity sits, please reach out, we’re here to help.  And when you’re ready, look out for Part 2, where we’ll break down what SORP 2026 means for your charity.

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.