Trustees’ Annual Reports Under SORP 2026: What Charities Need to Know

The introduction of Charities SORP 2026 marks one of the most significant updates to charity reporting in recent years.

While much of the focus has been on accounting changes, one area that will see a notable shift is the Trustees’ Annual Report (TAR) - a document that is becoming increasingly important in demonstrating transparency, impact and accountability.

For trustees and finance teams, now is the time to understand what’s changing and how to prepare.

Why the Trustees’ Annual Report Matters More Than Ever

The Trustees’ Annual Report has always been a key part of charity reporting - providing context to the financial statements and explaining how resources have been used.

Under SORP 2026, its role becomes even more prominent.

There is a clear move away from “tick-box” compliance towards more meaningful, user-focused reporting that helps stakeholders understand:

• What the charity does

• What it has achieved

• How effectively it is using its resources
  

The emphasis is on telling a clear and credible story about the charity’s performance and future direction.

A New Tiered Approach to Reporting

One of the most important structural changes is the introduction of a three-tier reporting framework, based on gross income:

• Tier 1: Up to £500,000

• Tier 2: £500,000 to £15 million

• Tier 3: Over £15 million
  

The level of detail required in the Trustees’ Annual Report will now vary depending on which tier your charity falls into.

For larger charities, this means more comprehensive disclosures, while smaller organisations benefit from a more proportionate approach.

Stronger Focus on Impact and Outcomes

A key theme running through SORP 2026 is the shift towards impact reporting.

Charities will be expected to go beyond describing activities and instead explain:

• The difference their work has made

• The outcomes achieved for beneficiaries

• The wider value delivered to society
  

Impact reporting is no longer optional - it is becoming a core expectation within the Trustees’ Annual Report.

Greater Transparency on Reserves, Strategy and Future Plans

The updated guidance places more emphasis on helping readers understand a charity’s financial position and long-term sustainability.

Trustees will need to provide clearer explanations of:

• Reserves policies and how they link to actual reserves

• Financial resilience and risk management 

• Future plans and strategic priorities 
  

This is designed to give funders, donors and regulators a more complete picture of how the charity is managed.

Improved Alignment with Financial Statements

Another important change is the expectation that the narrative in the Trustees’ Annual Report will align more closely with the financial statements.

In practice, this means:

• Ensuring consistency between reported activities and financial data

• Clearly linking narrative explanations to figures in the accounts

• Providing a balanced and understandable overview
  

This improved alignment should make reports easier to follow and more useful to stakeholders.

Additional Disclosures: Volunteers and ESG

SORP 2026 also introduces expanded reporting in areas that are increasingly important to the public.

Charities may need to include:

• Greater detail on the role and contribution of volunteers 

• Information on environmental, social and governance (ESG) factors

• Broader context around how the charity operates and delivers value
  

These additions reflect growing expectations around transparency and accountability beyond purely financial performance.

When Do the Changes Apply?

The new SORP applies to accounting periods starting on or after 1 January 2026, meaning many charities will first feel the impact in their 2026/27 reporting cycle.

Although that may seem some way off, preparing early is strongly recommended - especially where changes to systems, processes or reporting structures are needed.

How Should Trustees Prepare?

To get ahead of the changes, trustees and finance teams should consider:

• Reviewing current Trustees’ Annual Reports against the new requirements

• Identifying gaps in areas such as impact reporting and reserves disclosures

• Ensuring systems capture the data needed for enhanced reporting

• Providing training for trustees and senior staff
  

Early preparation will make the transition smoother and reduce pressure when the new rules come into force.

How We Can Help

SORP 2026 is not just a compliance exercise - it’s an opportunity to improve how your charity communicates its story and impact.

At SJC, Chartered Accountants, we support charities with:

• Interpreting the new SORP requirements

• Reviewing and improving Trustees’ Annual Reports

• Strengthening financial reporting and governance

• Preparing for a smooth transition to 2026 standards
  

If you would like guidance on how these changes affect your charity, our team is here to help.

Get in touch today to ensure your reporting is clear, compliant and future-ready.