When Do the Changes Take Effect?

At the time of writing, the updated SORP is expected to apply for accounting periods beginning on or after 1 January 2026.

In practice it means many charities will need to start preparing now—particularly where changes affect how information is gathered throughout the year.

What Trustees Will Need to Do Differently

Public Benefit and Impact

Trustees have always been required to demonstrate public benefit, but the expectation now is that this is explained more clearly and meaningfully.

Rather than simply listing activities, trustees will need to:

• Clearly explain what the charity is trying to achieve
• Show how activities contribute to those aims
• Demonstrate the difference made (not just what was done)

Stronger Narrative Around Financial Performance

There is an increasing expectation that trustees properly explain the financial results.

The Trustees’ Report should clearly describe:

• Explain where income has come from (recurring vs one-off)
• Describe how funds have been used
• Highlight and explain significant movements

Reserves – More Than Just a Policy

Reserves remain a key area of focus, but expectations are increasing.

Trustees should now explain:

• State the level of reserves held
• Explain why this level is appropriate
• Link reserves to future plans and risks

Risks, Uncertainty and Forward Planning

The Trustees’ Report is also expected to provide a clearer view of:

• Identify key risks and uncertainties
• Explain how risks are managed
• Set out future plans and financial sustainability

There is a clear shift towards forward-looking reporting, helping stakeholders understand not just what has happened, but what lies ahead.

Technical Changes – Including Lease Accounting

Alongside the narrative changes, there will also be technical accounting updates that charities will need to consider.

One area that may affect many organisations is the treatment of leases, particularly where property or equipment is involved. Changes in accounting standards can impact how leases are recognised and disclosed in the accounts.

At Hilton Jones, we will support clients through these changes, ensuring that the accounting treatment is correct and clearly explained.

Where to Find Further Guidance

• Prepare a charity trustees’ annual report:

https://www.gov.uk/guidance/prepare-a-charity-trustees-annual-report

• SORP Trustees’ Annual Report guidance:

https://www.charitysorp.org/documents/23956307/39135982/1-trustees%E2%80%99-annual-report.pdf

• Changes to charity accounting and reporting:

https://www.gov.uk/guidance/changes-to-charity-accounting-and-reporting

• Trustees’ Annual Report template:

https://www.gov.uk/government/publications/trustees-annual-report-template-sorp-frs-102

What This Means in Practice

A stronger Trustees’ Report will:

• Clearly explain the charity’s purpose and impact
• Provide meaningful commentary on financial performance
• Demonstrate oversight of risks and reserves
• Give confidence to funders, stakeholders, and regulators

Importantly, this cannot be left until the year end. Good reporting depends on having the right information and processes in place throughout the year.

How We Can Help

At Hilton Jones, we are working closely with charities to prepare for these changes.

As part of our service:

• We will automatically review your Trustees’ Annual Report as part of the accounts process
• We will identify areas where additional disclosure or clarity is needed
• We will provide practical, jargon-free guidance to help improve your reporting
• We will support you with technical areas such as lease accounting and other SORP requirements

Our aim is to ensure that your reporting is not only compliant, but clear, professional, and reflective of the work you do.