Does My Small Charity Still Need an Independent Examination?

It depends on your income, and the figures have just changed. For financial years ending on or after 30 September 2026, a charity in England and Wales with income of £40,000 or less no longer needs an independent examination or audit. The old limit was £25,000. Above £40,000, an independent examination is still required, and an audit only applies once income passes £1.5 million.

If you're a trustee who has just heard about the change, or a funder has asked for an examination, and you're unsure whether it still applies, this is where your charity probably sits.

What changed, and from when?

The Charity Commission has raised several accounting thresholds, and they apply to financial years ending on or after 30 September 2026. Your year-end date decides which set of figures applies. A charity with a 31 August 2026 year end is still under the old limits for that set of accounts, while a 30 September 2026 year end falls under the new ones.

Where does your charity sit now?

• Income of £40,000 or less: No independent examination or audit is needed, unless your governing document or a funder says otherwise.

• Income over £40,000 up to £500,000: An independent examination is required.

• Income over £500,000 up to £1.5 million: The examination has to be carried out by a professionally qualified independent examiner.

• Income over £1.5 million: A full audit applies.

An audit also applies if income is over £500,000 and assets are over £5 million. Unincorporated charities and CIOs with income of £500,000 or less can prepare receipts and payments accounts, and accruals accounts are needed above that.

Why might you still need an independent examination if you're under £40,000?

Your governing document may say the accounts must be independently examined, and the Commission's guidance is clear that it takes priority. A grant agreement can include the same condition. Check both before you decide to skip it.

Some trustees keep the examination going even when it's no longer required. A second pair of eyes on the accounts gives funders and donors more confidence, and it catches mistakes before they become anyone's problem.

Do you still have to send your accounts to the Charity Commission?

Probably yes. The threshold for sending your Trustees' Annual Report and accounts to the Commission stays at £25,000. A charity with income between £25,000 and £40,000 still files, just without the examination. The annual return applies once income is over £10,000. Filing is due within ten months of your year end.

What if your charity is a company?

Charitable companies sit under company law as well as charity law, and audit exemption has to be checked against both. If you're a charitable company, confirm the position before you assume the new limits apply to you.

Who can carry out the examination?

The examiner has to be independent of the charity and its trustees, and needs the ability and practical experience to do the work. Once income passes £500,000, they must also be professionally qualified, which is a higher bar than before, when the limit was £250,000.

What happens if the accounts aren't done when they should be?

The Commission shows overdue accounts on its public register, where funders and donors can see them. Trustees carry the legal responsibility, which is why getting the right level of scrutiny identified early saves a lot of worry later.

So what should you do about it?

Knowing the rules is half of it. The other half is having accounts that are ready when your year end arrives, whichever level of scrutiny applies to you.

Most small charities run into difficulty well before an examiner or funder sees a single figure. The records are split between a banking app and a treasurer's inbox, restricted funds are tangled up with general money, and nobody is certain what the accounts should look like for a charity of their size.

This is the work a bookkeeper and accountant who knows the charity sector takes on. Through the year, the bookkeeper keeps your records current and reconciles the bank, with each grant and donation recorded against the right fund so the numbers can be trusted. At year-end, the accountant turns those records into accounts in the format your income requires, whether that's receipts and payments or accruals. Restricted and unrestricted funds are shown separately, which makes life far easier when a funder asks how their grant was spent. They can also read your governing document and funding agreements and tell you which requirements apply to your charity.

An independent examiner has to be independent of your charity, so the examination itself is carried out by someone else. Handing them organised, accurate accounts usually makes that stage quicker and less costly.

If your income has just fallen below £40,000, there's no longer an outside check on your numbers. That makes reliable bookkeeping underneath them matter even more, since the trustees are the only ones looking.

Strive Business is a bookkeeping and accountancy firm that specialises in small charities and CICs. If you're not sure which requirement applies to your charity, or your year end is close and the accounts aren't ready, get in touch with Strive and we can tell you quickly where you stand.