The 2026 SORP introduces significant revisions to the Trustees’ Annual Report, representing one of the most substantial updates aside from changes to income recognition and operating lease capitalisation.
Main Changes
New Tiered Reporting Structure
The previous “Smaller” and “Larger” classifications have been replaced with a three‑tier model. Tier 1 covers the smallest charities (up to £500,000 income) and Tier 3 the largest (greater than £15 million income). Reporting requirements increase with each tier, ensuring more proportionate and scalable disclosures. Each section of the Module outlines the Tier 1 requirements first, followed by the additional obligations for Tiers 2 and then for Tier 3.
Revised Report Structure
While core sections such as Objectives, Activities, and Achievements remain, a new mandatory “Sustainability” section has been added for Tier 3 charities (and recommended for others).
A separate Article on Sustainability disclosures can be found here.
Retention of ‘Must/Should/May’ Framework
The established hierarchy of requirements continues, with “Must” denoting mandatory disclosures.
Other Key Areas of Change
Reserves
All charities are now subject to more detailed reserves disclosures. The glossary provides a clearer definition, though it allows tailoring to specific circumstances. The following are now mandatory:
- The reserves policy, including rationale (what money you believe you need to hold back and why)
- Actual reserves at the balance sheet date
- A reconciliation explaining how the reserves figure links to the accounts (where not obvious)
- A comparison of actual reserves to the policy target and actions planned to align them
- Material designated or otherwise committed funds
- Where there are no reserves or negative net assets why the charity believes itself still to be a going concern
Volunteers
The disclosure surrounding Volunteers has been enhanced. Disclosure requirements increase by tier. Tier 1 charities may provide a simple narrative on volunteer activity. Tiers 2 and 3 must include more detailed information, such as volunteer numbers, roles, and estimated hours.
Impact Reporting
Charities must now provide more detailed reporting on the impact of their work both on their beneficiary group and wider society. This requirement is mandatory for Tiers 2 and 3 and recommended for Tier 1. Charities may choose their own methods for assessing and evidencing impact. KPIs are not compulsory but may be included where helpful, as they can be a powerful tool for explain to stakeholders and funders what the charity is doing in the community.
Plans for Future Periods
All charities must now report their forward plans. These disclosures should align with reserves and going concern assessments to ensure consistent narrative reporting.
Other Amendments
Included within the new module are various detailed changes, including some relaxations:
- Some legal and administrative details are no longer required for Tier 1 charities.
- Reporting on fundraising performance against objectives is now limited to Tier 3.
Preparing for the New Requirements
Trustees and management should familiarise themselves with the revised SORP and identify any gaps in their current reporting. Charities may need to:
- Develop or refine policies, including reserves policies
- Establish processes for collecting impact data, including KPIs where relevant
- Implementing systems (e.g., surveys) to evidence beneficiary outcomes
- Begin gathering statistical information on volunteers where not available
Early preparation will help ensure a smooth transition.
How can we help?
For further guidance on implementing the new SORP, contact your usual Menzies adviser or watch our webinar.
Past Webinars & Updates
Contact Our Experts
