Charity independent examination: 2026 thresholds, examiner requirements and trustees’ responsibilities

Changes to charity accounting thresholds that took effect in September 2026 mean some charities in England and Wales may no longer need an independent examination or a statutory audit. Others may now have a choice about how their accounts are scrutinised, which could reduce compliance costs.

The threshold for independent examination has risen from £25,000 to £40,000 gross annual income, and the main audit threshold from £1m to £1.5m. Eligibility depends on more than income alone. Trustees must also consider the charity’s assets, its governing document, funding agreements and the level of assurance that suits the organisation.

This guide, written for trustees of charities in Liverpool, Manchester and across the North West, explains the new thresholds, who can act as an independent examiner, how to appoint one and what the examiner’s report tells trustees.

Key points

• Independent examination is required above £40,000 income (previously £25,000). An audit is required above £1.5m income, or above £500,000 income with gross assets over £5m
• Above £500,000 income, the examiner must belong to a body listed in the Charities Act 2011
• The examiner must be independent: a trustee cannot act, and neither can the charity’s bookkeeper
• Trustees decide the appointment in writing, record it in the minutes and should check independence each year
• Trustees remain responsible for preparing the trustees’ annual report and accounts

What are the charity independent examination thresholds for 2026?

The Charity Commission’s Threshold changes at a glance sets out the thresholds for financial years ending on or after 30 September 2026:

Requirement	Previous threshold	New threshold
Independent examination or audit required	Income over £25,000	Income over £40,000
Professionally qualified examiner required	Income over £250,000	Income over £500,000
Audit required: income test	Income over £1m	Income over £1.5m
Audit required: income and assets test	Income over £250,000 and assets over £3.26m	Income over £500,000 and assets over £5m
Accruals accounts required	Income over £250,000	Income over £500,000
Group accounts prepared and audited	Group income over £1m	Group income over £1.5m

These thresholds apply to charities in England and Wales. Different requirements may apply to charities registered in Scotland, and additional rules apply to some types of charity. The Commission’s trustee guidance on independent examination, CC31, was updated on 16 September 2026 but still shows the earlier figures and points readers to the new ones, so check which year’s figures apply to your charity. The rules also do not apply to exempt charities, which include academy trusts and most English universities.

Which charities no longer need an independent examination?

A charity with income of £40,000 or less generally no longer needs an independent examination or audit, unless its governing document requires one. For example, an unincorporated charity with income of £35,000 that previously arranged an examination may no longer be required to.

The duty to keep proper records and prepare accounts does not change. A registered charity with income over £25,000 must still send its trustees’ annual report and accounts to the Commission, and a registered charity with income over £10,000 must still file an annual return. Trustees should keep the requirement to prepare and submit accounts separate in their minds from the requirement to have them scrutinised.

Could your charity now choose independent examination instead of an audit?

Some charities that previously needed an audit may now qualify for an examination. Take a charity with income of £1.2m and gross assets of £2m, and no audit requirement in its governing document or funding agreements. Under the old thresholds it needed an audit, because income exceeded £1m. Under the new ones it can usually choose an independent examination, and because its income is over £500,000 the examiner must belong to a listed body.

Trustees cannot choose an examination if the governing document, a funder or the Commission requires an audit. If the governing document is the obstacle, CC31 notes that trustees may wish to amend it.

The law permitting a lighter option does not mean it is the right one. An audit may still give funders, lenders and donors reassurance that an examination does not. A charity with substantial restricted funding, several activities or financial uncertainty may decide the extra assurance is worth having. The question for trustees is what level of scrutiny suits the charity, in addition to what the law requires.

What is an independent examination?

CC31 describes independent examination as a light touch scrutiny in which the examiner checks for specific matters only. The examiner reviews the charity’s records, compares the accounts with them and considers any unusual items or disclosures. It does not involve forming an opinion on whether the accounts give a true and fair view, which is why it usually costs less than an audit. The Charities Act 2011 and the Commission’s directions for examiners, CC32, govern the process.

Independent examination or audit: what is the difference?

Independent examination	Statutory audit
Reviews specified matters relating to the accounts and accounting records	A more extensive examination of the financial statements
No true and fair opinion	Gives an audit opinion
Follows procedures set by the Charity Commission	Follows auditing standards
Usually less expensive	Generally more work and higher fees
Examiner must meet competence and independence requirements	Auditor must meet statutory eligibility and independence requirements

ICAEW publishes a guide on the choice between the two. Where an audit remains the better fit, the process can be more flexible than many trustees expect. An examination is not a substitute for sound internal financial controls or active trustee oversight.

Who can be an independent examiner?

The Charities Act 2011 requires trustees to appoint an independent person whom they reasonably believe has the ability and practical experience to carry out a competent examination. Two tests apply: skills and independence.

Skills and qualifications

Where income is over £500,000, the examiner must be a member of one of the bodies listed in the Charities Act 2011, and that body’s rules must allow them to act as an independent examiner. The listed bodies include ICAEW, ACCA, CIMA, CIPFA and the Association of Charity Independent Examiners, and CC31 gives the full list.

Where income is £500,000 or less, membership of a listed body is not required, but the examiner needs enough accounting skill for the charity’s accounts. For accruals accounts, CC31 recommends choosing a member of a listed body, because the examiner needs to understand accounting standards and the Charities SORP. Trustees should ask professional examiners for proof of membership, and non-professional examiners to explain the skills and experience that make them competent.

Independence

The examiner must not be influenced, or appear to be influenced, by relationships with the charity and its trustees, so a trustee cannot act. Independence is not the same as having no connection. A supporter of the charity can examine its accounts, provided they have no close relationship with the charity or its trustees and are not involved in its day-to-day administration. CC31 lists situations that call independence into question, including where the examiner:

• is an employee or the bookkeeper of the charity
• serves on a sub-committee overseeing the charity’s finances
• is a major donor to, or beneficiary of, the charity
• has a significant financial or commercial relationship with the charity or its trustees
• has a close relationship with the trustees or other related parties

Where trustees are unsure, they should ask the examiner to explain in writing why they consider they meet the criteria, and then decide whether they are satisfied. Trustees must also respect the examiner’s independence. They must not suggest that the work depends on the examiner providing personal benefits or donations, or accepting particular accounting treatments. The Commission views that as unethical, and it may be an offence under the Bribery Act 2010.

How should trustees appoint an independent examiner?

The appointment is a decision for the trustees. It should be made in writing and recorded in the minutes, and the examiner should confirm it, which can be done by email. A professional examiner may issue a letter of engagement setting out the work, the timetable and the fee. In practice, trustees should work through six points:

1. Is the charity eligible? Check income and assets against the thresholds, and check the governing document and funding agreements for audit requirements.
2. Does the examiner have suitable experience? For accruals accounts, familiarity with the Charities SORP matters.
3. Is the examiner independent? Consider any relationships, financial interests or involvement in the charity’s administration.
4. Have scope, fees and timetable been agreed? A written engagement letter is good practice.
5. Will the examination finish in time? Accounts must be filed with the Commission within 10 months of the year end, and charitable companies must also file at Companies House within nine months.
6. Is the appointment reviewed each year? Before confirming the examiner for another year, check that they remain independent and have the skills needed. This matters most if income has risen: if it goes over £500,000, check whether an examination is still allowed and whether the examiner belongs to a listed body.

Finding an examiner can take time, so it should not be left until the accounts are due. If the Commission advises that an examiner has not performed to the required standard, trustees should stop using them.

How should charities prepare for an independent examination?

CC31 says trustees must keep the accounting records up to date and make them available to the examiner, along with the governing document and the minutes of trustee meetings. The examiner may also need to speak to trustees and staff, so the examination should happen when they are available. As a matter of practice, trustees can make the process smoother by having bank reconciliations, supporting invoices, a breakdown of restricted and unrestricted funds, and explanations of unusual items ready.

The trustees remain responsible for preparing the trustees’ annual report and accounts. The examiner can help with preparation as well as carrying out the examination, provided they are not involved in maintaining the accounting records or in the charity’s day-to-day management. The trustees must keep oversight and request any amendments they consider necessary.

What does an independent examiner’s report tell trustees?

The outcome is a report from the examiner to the trustees. The examiner reports on whether they have reasonable cause to believe, in any material respect, that:

• proper accounting records were not kept
• the accounts do not accord with the accounting records
• where accruals accounts were prepared, they do not comply with the legal requirements and the applicable SORP, other than the true and fair view requirement, which an examination does not consider

The examiner must also include any other significant concerns, such as material spending that is inconsistent with the governing document. An examiner must report matters of material significance directly to the Commission. Joint guidance from the UK charity regulators includes dishonesty and fraud, money laundering and criminal activity, and failure to manage significant conflicts of interest appropriately among them.

A clean report is not a guarantee that the charity is financially sound or that fraud or error cannot have occurred. Where the examiner raises concerns, trustees should take them seriously, work with the examiner to resolve them where practicable and record the action taken. Used well, the report is part of the charity’s wider financial governance, as well as a filing requirement.

How do the 2026 changes affect other accounting requirements?

For unincorporated charities and CIOs, the income limit for receipts and payments accounts has risen from £250,000 to £500,000, so a charity below it can choose the simpler basis. Charitable companies must continue to prepare accruals accounts.

The thresholds and the Charities SORP 2026 start on different dates. The thresholds apply to financial years ending on or after 30 September 2026, while SORP 2026 applies to financial years beginning on or after 1 January 2026. For a charity whose year does not follow the calendar year, that difference matters. The reserves reporting changes are covered in charity reserves under SORP 2026.

Six questions trustees should ask before their next year end

1. Are we applying the right thresholds? Have we checked income, gross assets and the year-end date?
2. Do we still need an audit? Could an independent examination now be an option, and would it give enough assurance?
3. Are there other requirements? Does our governing document, a funding agreement or another obligation require an audit?
4. Is our proposed examiner eligible and independent? Have we checked qualifications, experience and conflicts?
5. Are our records ready? Can we provide complete accounting records, supporting documents and draft accounts?
6. Have we left enough time? Is there room for the examination, approval and filing before the deadlines?

A documented annual review of these points helps trustees show they have considered their responsibilities and chosen a suitable level of scrutiny.

Frequently asked questions

Could your charity benefit from the new thresholds?

The changes may affect the level of scrutiny your charity needs, particularly if its income previously placed it above the audit threshold. UHY Williamson Croft’s charities and not-for-profit team works with trustees across Liverpool, Manchester and the wider North West on audit and assurance, helping them understand their reporting responsibilities and make informed decisions. If you are unsure whether your charity still needs an audit, or whether an independent examination would be appropriate, get in touch or call Taylor Rogers on 0161 399 0121 (Manchester) or 0151 303 3112 (Liverpool).

Further reading: Charity finances under pressure: five risks trustees should be reviewing in 2026.

Sources: Charity Commission, Threshold changes at a glance, Charity Commission, CC31, Charity Commission, CC32, UK charity regulators, matters of material significance, Charities Act 2011, section 144, section 145, ICAEW, new charity financial thresholds are now in effect.