Charity Sector Technical Update – April 2026

Charity Legislation

Charities Act 2022: Ex-Gratia Payments (November 2025)

• The final provisions of the Charities Act 2022, relating to ex-gratia payments, came into force in November 2025. Further guidance is set out in an updated CC7.
• An ex-gratia payment arises when a charity considers that it has a compelling moral obligation to make a non-charitable payment to a third party even though it has no legal or contractual obligation to do so. An example would be where a charity is in receipt of a legacy and becomes aware that the testator had intended to make changes to their will but had been unable to do so. In this case, the charity may agree to abide by the intentions of the testator.
• Previously, permission was required from the charity commission for all ex-gratia payments. Now, provided the payment does not exceed certain financial thresholds, permission is no longer required. The thresholds depend upon a charity’s income as follows:

Governance

Charity Governance Code (November 2025)

• An updated version of the Charity Governance Code was published in November 2025. The code is not a legal or regulatory requirement but it sets out the principles which a well-run charity should aspire to achieve. Previously there were separate governance codes for small and large charities but the new code is designed to apply to all charities. There are 8 key principles which are supported by detailed guidance on how to apply these principles. Key changes from the previous codes include:
• Environmental Responsibilities: For example, considering the environmental impact of decisions.
• Equity, Diversity and Inclusion: Providing expanded guidance on how Trustees should consider how discrimination and inequality may be present in the charity.
• Charities which choose to comply with the code should include a short note confirming this in their Annual Trustees’ Report, and, where applicable, they should also explain the nature of, and reasons for, any areas of non-compliance.

Fundraising

Code of Fundraising Practice (November 2025)

• The new Code of Fundraising Practice came into effect from 1 November 2025. It has moved to a principles based code rather than a rules based code, with supporting guides to assist with the interpretation of the principles.
• It is designed to be applied flexibly as new fundraising technologies and practices are developed and it also includes a number of updated sections such as strengthened protections for fundraisers.
• The code is voluntary with the aim of promoting consistent high standard fundraising. It does however provide links to specific legal requirements. Larger charities must state in their Annual Report whether they comply with this code and, if so, whether there have been any failures to comply with the code.

Charity Commission Guidance on Charity Fundraising (CC20) (February 2026)

• This guidance has been refreshed to reflect the new fundraising code. It covers fundraising planning, monitoring fundraising practices, and dealing with complaints. It also covers fundraising literature and agreements with professional fundraisers and commercial participators.

Charity Commission Guidance on Fundraising for an Emergency (CC40) (February 2026)

• This updated guidance covers the powers and capacities of charities to respond to emergencies and the appropriate ways to conduct a fundraising appeal.

 Accounting and Reporting

The Charity Statement of Recommended Practice (SORP) (Issued October 2025)

• The revised Statement of Recommended Practice (SORP), which was issued in October 2025, sets out the detailed requirements for Charity financial reporting. Its effective implementation date is for accounting periods commencing on or after 1 January 2026.
• The revised SORP categorises charities into 3 tiers, based on their income, which determines the amount of disclosure required. For example, in future, only charities with income exceeding £15m (Tier 3) will be required to produce a cash flow statement. The tiers are as follows

 The SORP incorporates the changes to Financial Reporting Standard 102 which principally relate to new lease accounting rules and a more detailed set of rules regarding commercial income recognition. Under the new lease accounting rules, leased assets are no longer categorised between operating and finance leases. In future, all leases, including rented properties, will need to be accounted for on the Balance Sheet with a corresponding lease liability. The new criteria for recognising commercial income are unlikely to have a significant impact on existing accounting policies but existing contracts, where services are delivered over time, will need to be examined.

• The SORP also substantially revises the reporting requirements of the Trustees Report with a greater focus on impact reporting and areas considered to be of key concern to stakeholders including sustainability reporting, going concern reporting, reserve reporting and additional details about volunteers.

Discover more about the updates to the Charity SORP 2026 via our webinar hosted in October 2026.

Charity Financial Thresholds Changes (Issued October 2025)

• In April 2025, the Department of Culture Media and Sport commenced a consultation into raising a number of financial thresholds to reflect inflation since the thresholds were first set. The revised thresholds, which will come into force from October 2026, have now been confirmed and include:

International Non-Profit Accounting Standard (INPAS) (October 2025)

• A project was undertaken to produce an international standard for non-profit entities. The project, sponsored by CIPFA and Humentum, was completed in October 2025 when an International Standard (referred to as INPAS) was issued. The standard seeks to standardise financial reporting, in accordance with best practice, and to remove inconsistent practices across countries. There is no direct impact on UK charity accounting but this standard may influence future charity SORPs in the UK in the longer term.

About the Author

Kevin Lally

Senior Partner

• Telephone: 020 7332 6400
• Email: [email protected]