Audit and independent examination thresholds are changing from 1 October 2026

The rules that decide how a charity's accounts must be scrutinised are set to change. From 1 October 2026, the government is raising the income thresholds that determine whether a charity in England and Wales needs a full audit, a lighter-touch independent examination, or no external scrutiny at all. For a great many faith-based charities this is welcome news: it means the level of scrutiny required by law becomes more proportionate to size, and some charities will face a lighter — or cheaper — requirement than before. This article explains what is changing, who it affects, and what to check. It is general information, not advice — take advice on your own charity's position.

The short version

The thresholds are moving upwards, which means the point at which each tier of scrutiny kicks in is higher than it is now. In broad terms:

• Fewer charities will be legally required to have an audit.
• Some charities currently needing an audit will be able to move to a simpler independent examination.
• More smaller charities will fall below the level at which any external examination is required by law.

The government estimates the wider package of threshold changes will save charities around £47 million a year in professional fees and administration.

What's actually changing

The figures below apply to charities registered with the Charity Commission for England and Wales. (Scotland and Northern Ireland have their own regulators and rules — see the note below.)

• The floor for an independent examination rises from £25,000 to £40,000. Below this income level, a charity is not legally required to have its accounts externally examined at all — though its governing document or funders may still ask for one.
• The audit threshold rises from £1 million to £1.5 million of income. Charities with income between the examination floor and this figure can generally have an independent examination rather than a full audit.
• The "large assets" audit test is easing too. An audit is currently triggered where gross assets exceed £3.26 million and income exceeds £250,000; those figures rise to £5 million of assets and £500,000 of income.
• The point at which an examiner must be professionally qualified rises from £250,000 to £500,000. Above this income level, an independent examiner must be a member of an approved professional body.
• Simple "receipts and payments" accounts go further. Non-company charities will be able to use cash-based receipts and payments accounts up to £500,000 of income — double the current £250,000 limit.

What it means in practice

The practical effect depends on where your charity sits:

• If your income is under £40,000: you may no longer be required by law to have an independent examination. Many charities in this position still choose to, because members, funders or their own trustees value the reassurance — and because good scrutiny is good governance.
• If your income is between £40,000 and £1.5 million: an independent examination will generally be enough. If you're near the top of that range and were expecting an audit, check whether you now fall below the audit line.
• If your income or assets are close to any of these lines: take care. A single unusually large grant or legacy can push you over a threshold for that year, so it's worth planning ahead. (This is one of the things a good year-end checklist is for.)

Two important caveats. First, these are the legal minimums — your governing document may set a higher requirement of its own, and a funder or grant-maker can still make audited accounts a condition of their support. The law changing doesn't override either of those. Second, moving to a lighter form of scrutiny is a choice as much as a rule: an audit or examination still has real value, and stepping down isn't automatically the right call for every charity.

Which accounts are affected?

The new thresholds are intended to apply to accounts for financial periods ending on or after 30 September 2026. In practice that means the change will start to bite for year-ends from the end of September 2026 onwards — so for many charities the very next set of accounts prepared after the change could be affected. If your year-end is, say, 31 December 2026 or 31 March 2027, this is one to factor into your planning now.

A note on the nations

These figures are for England and Wales. Scotland (regulated by OSCR) and Northern Ireland (regulated by CCNI) set their own thresholds and requirements, which differ. If your charity is registered in more than one part of the UK, or based in Scotland or Northern Ireland, check the position with the relevant regulator rather than assuming the England and Wales figures apply.

A point of honesty on timing

At the time of writing, the secondary legislation to make these changes has been laid before Parliament and the government intends it to come into force on 1 October 2026 — but it remains subject to parliamentary approval. The direction of travel is clear and well-signalled, but until the legislation is finally made, treat the exact date as expected rather than guaranteed, and confirm the current position before you rely on it for a specific set of accounts.

How this connects to everything else

This change sits alongside a bigger shift in charity accounting: the new Charities SORP 2026, which affects how your accounts are prepared. The thresholds here affect what level of external scrutiny those accounts then need. If you're unsure of the difference between the two forms of scrutiny in the first place, our guide to independent examination or audit walks through what each one actually involves. And because deciding — and evidencing — which regime applies is ultimately a board responsibility, it's worth reading alongside finance as every trustee's responsibility.

What to do now

• Note your charity's income and gross assets for your current and expected year-ends, and see where they fall against the new figures.
• Check your governing document for any audit or examination requirement of its own.
• Check your funding agreements for conditions about audited accounts.
• Talk to your examiner or accountant before assuming you can step down a level — and before your year-end, not after it.

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This article is general information, not advice. Thresholds and the legislation behind them can change, and the right level of scrutiny depends on your charity's circumstances. Confirm the current position with your regulator, or talk to us about independent examination and we'll help you work out exactly what your charity needs.