The charity audit threshold sets the point at which a registered charity in England and Wales must move from independent examination to a full audit. The headline figures are annual income above £1 million, or income above £250,000 combined with assets above £3.26m. Smaller charities can usually opt for examination instead, which is faster, lighter, and cheaper.
This guide explains the current rules for a charity registered with the Charity Commission, how trustees decide between the two routes, who can sign off on the accounts, and the changes signalled for 2026. We don’t cover Scotland here. Scottish charities follow a separate regime under OSCR, and we only act for charities under the Charities Act 2011.
What is the charity audit threshold?
The income threshold for a statutory audit applies to charities in England and Wales. The figure is set by Parliament and reviewed periodically. Charity law gives trustees a clear test: above the line, you need a full audit. Below it, you can choose between an audit or independent examination.
Under the Charities Act, a registered charity must have a statutory audit if either test applies for the financial year:
- gross income is more than £1 million, or
- income is more than £250,000 and the aggregate value of its assets (before deduction of liabilities) is more than £3.26 million.
If neither test is met, trustees can choose between a full audit and an examination. Most smaller charities opt for the examination route because it costs less and takes less time. Trustees can still commission a voluntary audit if their funders, governing document, or the board want the higher level of assurance.
These financial thresholds sit in the Charities Act as amended. The Commission publishes the working definition of “gross income” in its charity reporting and accounting guidance: it is essentially total incoming resources for the year, including donations, grants, trading income, and investment income. It is not the same as turnover.
Quick threshold table
| Annual gross income | Annual gross assets | Audit required? | Most common route |
|---|---|---|---|
| Over £1 million | Any | Yes | Full statutory audit |
| £250,000 to £1m | Over £3.26m | Yes | Full statutory audit |
| £250,000 to £1m | £3.26m or less | No | Independent examination by a qualified examiner |
| £25,000 to £250,000 | Any | No | Examiner (any competent person) |
| Under £25,000 | Any | No | Receipts and payments accounts, light-touch scrutiny |
The figures above are current as we publish this guide. They have been stable for several years. We update this page when new figures are announced.
When does a charity need an audit?
A charity needs a statutory audit when it crosses either of the income or asset triggers above. There are also three other triggers that can require an audit even when the financial thresholds are not met:
- Governing document. If the charity’s trust deed, constitution, or articles of association requires one, the trustees must arrange it regardless of size.
- Funder requirements. Some grant-makers and contract bodies require it as a condition of funding. NHS bodies, large foundations, and central government departments often do.
- Trustee discretion. The board can choose a voluntary audit if they think the assurance is needed. Charities preparing for a merger, a major funding round, or a significant change in scale often do.
Companies that are also registered charities have to apply both the charity threshold and the company threshold. If the entity is a charitable company limited by guarantee, the trustees should check the Companies Act 2006 audit requirements too. In practice the charity test usually bites first, but it’s worth confirming with your accountant.
Does my charity need an audit?
The short answer: only if gross income is above the £1m line, or above £250,000 with assets above £3.26m, or your governing document or a major funder requires it. Below those triggers, an independent examination is normally enough.
If you are unsure where you sit, look at last year’s accounts and the projected income for the current year. Trustees should also factor in one-off legacies or large grants that could push income temporarily above the limit. A single year over pulls the charity into the higher bracket for that year.
The 2 year rule
There is no formal “two-year rule” in the legislation itself. The phrase comes from a practical reading: trustees often look at two consecutive years of accounts before deciding whether to commission a full audit, switch back to examination, or step down to receipts and payments. If a one-off legacy or grant pushes income over the limit for a single year, that doesn’t fix a permanent path. The test is applied year by year.
Where the phrase does have force is in the change of accounts basis. A charity moving from receipts and payments up to accruals, or back down, is typically advised to plan a stable two-year transition so comparatives make sense to readers. The Commission’s guidance on charity reporting and accounting covers this in detail.
Who can audit charity accounts?
Only a registered auditor can carry out a statutory charity audit. The auditor must be:
- eligible under the Companies Act 2006, normally a member of one of the recognised supervisory bodies (ICAEW, ACCA, or ICAS),
- registered with that body’s audit register, and
- independent of the charity. They cannot be a trustee, an employee, a related party, or have a material business relationship with it.
For an independent examination below the limit, the rules are looser. Where gross income sits between £250,000 and £1m, the examiner has to be a qualified person. The legislation lists the eligible bodies, and Commission guidance on independent examination of charity accounts names the recognised qualifications. For charities under £250,000 income, any competent person can act, though most still appoint an accountant.
Audit Group is part of Jack Ross Chartered Accountants, established 1948. We are an ICAEW Registered Auditor and the firm has acted for charities for decades. If you are looking at the move from examination to a full audit, or you want a second opinion on whether your charity has crossed the limit, get in touch and we will tell you straight.
Audit and independent examination: how they differ
The choice between the two is the biggest decision smaller charities make about external scrutiny. Both produce a report that goes to the trustees and is filed with the Commission. The difference is in depth and in who signs it off.
A full audit is a higher level of assurance. The auditor tests transactions, balances, and internal controls against International Standards on Auditing (UK). The opinion gives a “true and fair view” conclusion on the accounts. It costs more because the work is more extensive.
An examination is a lighter check. The independent examiner reviews the accounting records, looks for inconsistencies, and reports by exception on whether anything has gone wrong. They do not give a true and fair view opinion. For most small charities, this is the right level of scrutiny. Guidance on independent examination of charity accounts sets out what the examiner has to check.
If you want to compare the two side by side, our charity audit vs independent examination guide breaks down the work, the cost, and the report wording.
Receipts and payments vs accruals accounts
A charity below £250,000 income that is not a charitable company can choose receipts and payments accounts. These are the simplest form: a record of money in and money out for the year, plus a statement of assets and liabilities. They are cheaper to prepare and easier for small trustee boards to maintain.
Above £250,000, or for any charitable company regardless of size, accruals accounts are required. These follow the Charities SORP (Statement of Recommended Practice) and produce a full set of statements: a statement of financial activities, a balance sheet, cash flow, and notes. The accruals figures are what an auditor or examiner works from when scrutinising the year-end position.
The SORP is being updated. The 2026 edition is expected to apply to financial periods starting on or after 1 January 2026, replacing the 2019 version. New accounting standards and the recommended practice together set out how an entity prepares its accounts each year. We cover the changes in detail on our charities sector page and will update this guide once the final version is in force.
Changes to financial thresholds in England and Wales
The Commission has been consulting on changes to charity financial thresholds since 2024. The Department for Culture, Media and Sport, which sponsors charity regulation, has signalled that the £1m line and the income limit for receipts and payments will both be reviewed. The aim is to lift the burden on small charities, charity trustees, and the wider charity sector. At the time of writing the existing rules remain in force, with no firm date for new figures in 2025 or 2026.
If the income limit rises (some commentators have suggested £1.5 million as a plausible figure), fewer charities will need a full review and more will use examination. If the receipts and payments limit rises, smaller charities can stay on the simpler accounts basis for longer. Significant changes of this kind are rare. The last major review was in 2015.
We will update this guide as soon as new figures are confirmed. If your charity sits close to the £1m income line and you want to plan for either outcome, the safest path is to keep your records audit-ready.
What about charities registered in Scotland?
Charities registered in Scotland fall under a different regime. The Office of the Scottish Charity Regulator (OSCR) and the Charities and Trustee Investment (Scotland) Act 2005 set the rules. The figures and the form of accounts are different.
We don’t act for Scottish-registered bodies and we don’t advise on the OSCR regime. If you are an OSCR-registered charity, the regulator’s website has the up-to-date figures and accounts requirements. Charities that operate in both jurisdictions should take advice in each.
Common questions about the threshold
What is the audit threshold for a charity?
In England and Wales, gross income above £1m, or income above £250,000 combined with assets above £3.26m, triggers a statutory audit. Below those figures the charity can usually opt for an examination.
What are the thresholds in the UK?
For charities the figures are £1m income or £250,000 income with £3.26m assets. For UK companies the rules are different and sit in the Companies Act 2006: turnover above £15m, balance sheet total above £7.5m, and more than 50 employees (any two triggers an external review). Charitable companies have to apply both sets.
Do all registered charities have to be audited?
No. Only charities above the limit, or those whose governing document or a funder requires it, are obliged to. Most registered charities sit below the line and use independent examination instead.
What is the 30/70 rule for charities?
The 30/70 rule is sometimes used as a rule of thumb for trustee time and resources, where roughly 30% goes on governance and oversight and 70% on delivering the charity’s purposes. It is not a statutory requirement and it has nothing to do with the threshold decision.
How much does it cost?
A statutory charity audit for a smaller body (£1m to £3m income) typically falls in the £4,000 to £10,000 range. Larger or more complex charities pay more. An examination usually costs a fraction of that. We give a fixed fee on every engagement, so you know the number before we start. See our statutory audit costs guide for context.
Get a fixed-fee proposal
If your charity is above the limit, or you want to plan for the move from examination to a full audit, we can give you a fixed fee within two working days. Audit Group acts for charities including grant-making trusts, social enterprises, faith-based charities, and multi-academy trust holding companies.
To request a proposal, send us your last set of accounts and a short note on what’s changed this year. We will come back with a fixed fee, a draft timetable, and the team who would lead the engagement.
