Big changes are coming for UK and Irish charities. From 1 January 2026, a new version of the Charities Statement of Recommended Practice (SORP) will come into effect, aligning with updated accounting standards (notably FRS 102) and reshaping how financial information is recognised, reported, and communicated.
For many organisations, this will be more than a technical accounting change—it will indicate whether their finance system is fit for purpose.
What’s Changing?
The 2026 SORP introduces several updates. Among the most significant are:
- A new five-step model for revenue recognition based on IFRS 15 principles. It primarily affects income from contracts where goods or services are exchanged, such as service delivery contracts or membership fees. Non-exchange income (like grants and donations) will remain under a different model.
- New lease accounting rules that require most leases to be recorded on the balance sheet. This change will increase the visibility of liabilities but could significantly complicate reporting for those still relying on basic finance systems.
- Tiered reporting based on income levels, with more detailed disclosures expected from larger charities (over £15m income).
- Greater expectations for narrative reporting, including impact reporting, reserves policies, and information about volunteer contributions and ESG activity.
- Only the largest charities will be required to prepare a cash flow statement, easing the burden slightly for smaller organisations.
Why This Matters for Your Finance System
While accountants and auditors will guide you through the finer technical requirements, your finance system determines how efficiently and accurately you can comply. If your current system relies heavily on manual workarounds and Excel-based journals or doesn’t support flexible reporting and dimensional analysis, you may find the new SORP obligations difficult to manage.
For example, the five-step income recognition model will require clear visibility into contracts, obligations, and performance milestones. Can your current system track and recognise revenue against contractual milestones without spreadsheets?
Similarly, lease accounting changes require accounting for right-of-use assets and lease liabilities. Many legacy systems won’t support this out of the box, and retrofitting them could be costly.
Then there’s narrative reporting. Trustees will need to explain impact, sustainability, and reserves planning more clearly than ever. That means you need data about performance, not just transactions. Does your system help you tell your story?
Time to Review?
With the clock ticking toward 2026, now is the time for finance leaders, trustees, and senior management to assess whether their current finance systems are up to the challenge. Can you meet the new requirements easily, or will compliance come at the cost of increased admin, more spreadsheets, and less confidence in your data?
If you’re not sure, now is the perfect moment to explore your options.
Modern cloud-based finance solutions like Sage Intacct are built with multi-dimensional reporting, contract management, and compliance in mind—taking the stress out of SORP compliance and putting you in control of your charity’s financial future.
Want to learn more about how Vision33 is helping charities prepare for SORP 2026? Get in touch—we’d love to chat.
