Big Changes in Charity Accounting (2025/26)

Major Shifts in Charity Reporting:

• International Non-Profit Accounting Standard (INPAS) launched globally

• UK SORP 2026 introduced in the UK

The past few months have brought some of the most significant changes to charity reporting in years. With the launch of the International Non-Profit Accounting Standard (INPAS) and the introduction of the UK Charity SORP 2026, charities are entering a new era of reporting, governance and financial transparency.

Our goal is simple: to make these complex updates clear, practical and manageable for every charity.

Below is a summary of the two major developments, and what they mean in practice.

1. INPAS, The New International Non-Profit Accounting Standard

INPAS is the first global accounting framework designed specifically for non-profits. While not replacing UK SORP, it introduces a unified structure for charities working with international funders or operating across borders.

Key Changes Under INPAS

1. Tailored Accrual-Based Reporting
A bespoke accrual framework designed around the realities of non-profit income, funding cycles and obligations.

2. Clearer Grant & Restricted Income Rules
Improved classification and recognition principles for restricted vs unrestricted income, conditions, and performance obligations.

3. Strengthened Narrative Reporting
Charities must provide a more holistic explanation of activities, outcomes and financial context to complement the figures.

4. Donor & Project Reporting Consistency
INPAS includes guidance aligned with common funder requirements, helping reduce duplication in grant reporting.

5. Suitable for International Operations
Ideal for charities:

• receiving overseas grants

• delivering international programmes

• reporting to global funders

• needing consistency across jurisdictions

While INPAS is not mandatory in the UK, it will increasingly influence how charities communicate with global stakeholders.

2. UK Charity SORP 2026 — A Major Update to UK Reporting

SORP 2026 is the most substantial refresh of UK charity reporting in years. It applies to accounting periods beginning 1 January 2026 and introduces a more proportionate, clearer framework for charities of all sizes.

Key Changes Under SORP 2026

A. New Three-Tier Reporting Framework

• Tier 1: Income up to £500k

• Tier 2: £500k to £15m

• Tier 3: Over £15m
  Only Tier 3 charities (or those outside small entity FRS 102 rules) must prepare a cash flow statement.

B. Updated Income Recognition

• Clearer structured principles

• Improved guidance on restricted income

• More examples to support consistent treatment

• Better alignment with funder expectations

C. Lease Accounting Changes

• Many operating leases now recognised on balance sheet

• Includes right-of-use assets and lease liabilities

• Specific guidance on peppercorn or below-market leases

• Charities will need to gather more detailed lease data

D. Strengthened Trustees’ Annual Report (TAR)

• Clearer structure and expectations

• Stronger focus on:

  • Impact reporting

  • Reserves explanations

  • Risks and uncertainties

  • Future plans

• Encouragement towards ESG-related disclosures

• Improved alignment with the financial statements

E. Social Investments, Provisions & Heritage Assets

• Simplified social investment disclosures

• Updated guidance on provisions and contingencies

• Modernised heritage asset reporting (where relevant)

F. Updated Thresholds

• Independent examination required above £40k (previously £25k)

• Professionally qualified examiners required above £500k

• Receipts & payments accounts available for non-company charities up to £500k

How AWB Is Supporting Charities Through These Changes

Over the last month, AWB has been actively:

• Running client training sessions

• Holding one-to-one briefings

• Simplifying the technical updates into practical guidance

• Mapping out readiness plans for charities of different sizes

• Preparing tools to help charities assess their reporting tier, lease exposure and disclosure changes

• Ensuring trustees, CEOs and finance teams feel supported and informed

Our priority is to make this transition smooth, manageable and tailored to each organisation’s needs.

Looking Ahead

INPAS and SORP 2026 mark a step forward in transparency, accountability and proportionality in charity reporting. While the changes are significant, charities that prepare early will benefit from stronger financial communication and improved reporting practices.

At AWB, we’re committed to making sure every charity we work with is ready for these new standards.

If you’d like a briefing for your board, a workshop for your team, or a review of how these changes will affect your charity, we’d be delighted to help.

References

International Non-Profit Accounting Standard (INPAS)
International Non-Profit Reporting Foundation (INPRF).
INPAS — International Non-Profit Accounting Standard Overview.
https://ifr4npo.org/inpas/

UK Charity SORP 2026

Charity Commission / SORP-making body.
Charity SORP 2026 — Official SORP Website.
https://www.charitysorp.org/