The Department for Culture, Media and Sport (DCMS) is currently reviewing a number of key financial thresholds for charities, and they want your input.
This consultation covers the thresholds that determine when a charity must register, submit an annual report, file accounts, and undertake an independent examination or audit. These thresholds have not been reviewed since the Charities Act 2011, so this is an important opportunity for the sector to shape how proportionate and effective these requirements are.
The consultation is open until 11.45pm on Thursday 12 June 2025. You can submit your response here.
Why it is important to respond?
1. This is a rare opportunity for change
Thresholds set a charity’s reporting obligations and affect how much time and money is spent meeting them. Reviewing these every ten years ensures they remain proportionate and reflect inflation and other sector-wide changes. If they stay the same, charities risk being subject to unnecessary regulation. This is your chance to help get the balance right.
2. You can influence the direction of travel
For each threshold, the consultation offers three options:
- Keep it as it is
- Increase in line with inflation (CPIH)
- Increase by around 20 percent
This gives you a clear chance to support the direction that best reflects the needs of your charity and the sector.
3. The audit threshold could rise
At present, charities must have a statutory audit if their income exceeds £1 million. The consultation is exploring whether this could rise to £1.2 million or even £1.5 million. This would be a meaningful change for many small to medium-sized organisations. For context, the audit threshold for non-charitable companies is £15 million.
Raising the audit threshold could ease pressure on resources, reduce costs, and help address the challenge of auditor availability for charities.
4. Changes to the asset threshold could prevent unintended consequences
Currently, charities with income over £250,000 and assets over £3.26 million require an audit. The consultation proposes increasing the asset threshold to £4 million or £5 million.
With expected accounting changes under FRS102 and SORP 2026, which will bring operating leases onto the balance sheet, many more charities could meet the asset threshold even if their income remains low. An increase now would prevent these charities from being unintentionally pulled into audit requirements.
5. Independent examination thresholds are also under review
Charities below the audit threshold may still be required to have an independent examination. The consultation is considering raising the threshold from £25,000 income to either £30,000 or £40,000. This could be a small but significant change for the smallest charities.
What else is being reviewed?
The consultation also looks at:
- Registration thresholds with the Charity Commission
- Requirements to file annual returns and accounts
- Certain fundraising and regulatory thresholds
These changes could affect your reporting and compliance obligations for the next decade.
Take action
We encourage all charities to review the consultation and respond before the deadline on Thursday 12 June. This is a real opportunity to help shape a regulatory framework that supports good governance without placing unnecessary burden on organisations.
Let us know if you’d like to talk through the consultation in more detail, we’re happy to help.
If you are reading this after 12 June and did not get a chance to respond, it is still worth familiarising yourself with the proposed changes. These thresholds could affect your charity’s reporting and audit requirements in the near future. Staying informed will help you prepare, plan ahead, and support trustees with upcoming compliance needs.
We will share updates once the consultation results are published, and as always, we are here to help you understand what the changes might mean for your organisation.