Charities should begin preparing for a number of important developments that will affect financial reporting, governance and external scrutiny over the coming years. New accounting requirements and proposed regulatory changes are expected to reshape how charities prepare their accounts and communicate financial information to stakeholders.

Although the impact will differ depending on the size and activities of each organisation, trustees should start assessing the implications early to avoid unnecessary compliance challenges.

Two major developments are driving the changes:

• updates to UK accounting standards under FRS 102; and
• proposed increases to charity reporting and audit thresholds.

As charities apply sector-specific accounting guidance through the Charities Statement of Recommended Practice (SORP) rather than FRS 102 directly, changes to accounting standards have resulted in updates to charity reporting requirements. The revised Charities SORP is expected to apply to accounting periods beginning on or after 1 January 2026.

The updated guidance introduces a more structured approach to recognising income, particularly where charities receive income through contracts, trading activities, or service arrangements. Traditional charitable income streams — such as donations, grants and legacies — are already well addressed under existing guidance and are therefore expected to see limited practical change.

However, charities undertaking more commercial activities may need to reassess:

• when income is recognised;
• how contractual obligations are measured; and
• whether current accounting policies remain appropriate.

Trustees should ensure finance teams understand how income arrangements operate in practice before the first year of adoption.

One of the most noticeable accounting changes relates to lease arrangements. At present, many lease costs are recognised as annual expenditure with future commitments disclosed in the notes to the accounts. Under the revised rules, most leases will instead require:

• recognition of a right-of-use asset; and
• recognition of a corresponding lease liability.

This means charities may report materially higher asset and liability balances than under existing accounting policies.

Charities with office leases, equipment leases or property arrangements should consider:

• gathering lease data now;
• assessing system requirements; and
• modelling the financial statement impact before transition.

Limited exemptions will continue to apply to certain short-term and lower-value arrangements.

The revised SORP also introduces a more proportionate approach to narrative reporting through a tiered disclosure model. The proposed categories are:

• Tier 1: income below £500,000 – streamlined reporting requirements;
• Tier 2: income between £500,000 and £15 million – expanded disclosure expectations;
• Tier 3: income above £15 million – enhanced reporting and transparency requirements.

The intention is to improve the usefulness of charity reporting while reducing unnecessary burden for smaller organisations.

Separately, proposed legislative changes may increase the thresholds determining the level of independent review required. Current proposals include:

• increasing the independent examination threshold from £25,000 to £40,000; and
• increasing the statutory audit threshold from £1 million to £1.5 million.

If implemented, some charities may become eligible to move away from statutory audit, potentially reducing compliance costs.

However, trustees should consider more than the legal minimum. Audit can continue to provide value through:

• stronger governance;
• increased confidence for grant funders;
• lender requirements; and
• enhanced assurance for donors and stakeholders.

These developments should not be considered in isolation. Accounting changes may affect reported balances and could influence whether audit thresholds are met. Although implementation dates may appear some way off, charities that begin planning now will be better positioned to manage the transition effectively and maintain strong financial governance.

Trustees and finance teams should review the likely impact early and obtain professional advice where changes are expected to be material.

Landlords in England should be aware of an important new compliance requirement introduced under the Renters’ Rights Act. The reforms represent a significant change to the private rented sector and introduce new obligations designed to improve transparency and strengthen tenant protections.

One of the immediate requirements is the obligation to provide tenants with the government-issued Renters’ Rights Act Information Sheet 2026. For qualifying tenancies, landlords and letting agents must provide a copy of the official document to all named tenants by 31 May 2026. The information can be delivered either in hard copy or electronically (for example by email with the PDF attached).

This requirement generally applies where:

• the tenancy is an assured or assured shorthold tenancy;
• the tenancy commenced before 1 May 2026; and
• there is a written or partly written record of the tenancy terms.

The Information Sheet explains how the legislative changes affect existing tenancy arrangements and outlines the updated rights and protections available to tenants under the new regime.

The wider reforms include the abolition of Section 21 “no fault” evictions and broader measures aimed at creating a more stable and transparent rental market. Existing written tenancy agreements generally do not need to be reissued immediately, as the legal changes apply automatically; however, landlords remain responsible for ensuring tenants receive the prescribed information within the required timeframe.

Failure to comply may lead to enforcement action and financial penalties of up to £7,000. Landlords should therefore review their tenancy administration procedures, update communication processes and maintain records demonstrating when and how the Information Sheet was issued to tenants. Early action will help minimise compliance risk and avoid unnecessary penalties.

Savings interest can often be received tax-free, but the amount depends on your total taxable income and the interaction between several different tax allowances.

For the 2026/27 tax year, individuals benefit from:

• the Personal Allowance of £12,570;
• the Starting Rate for Savings of up to £5,000 (taxed at 0%); and
• where applicable, the Personal Savings Allowance (PSA).

For individuals with little or no other income, this can create a substantial tax-free band for savings interest.

Where non-savings income (such as salary, pension, rental profits or self-employment income) does not exceed £12,570, the full £5,000 starting rate for savings may be available. Combined with the Personal Allowance, this means an individual could receive up to £17,570 of income before tax applies, subject to the composition of that income.

In addition, the Personal Savings Allowance provides further tax-free interest:

• Basic rate taxpayers: up to £1,000 of savings interest tax-free;
• Higher rate taxpayers: up to £500 tax-free; and
• Additional rate taxpayers: no Personal Savings Allowance is available.

As a result, a basic-rate taxpayer with minimal non-savings income may be able to receive up to £18,570 of savings income without paying Income Tax.

It is important to note that eligibility for the Starting Rate for Savings reduces once non-savings income exceeds the Personal Allowance. The £5,000 allowance is reduced by £1 for every £1 that non-savings income exceeds £12,570, and is fully lost once non-savings income reaches £17,570.

Certain forms of investment income remain entirely outside these rules. For example:

• interest earned within an ISA; and
• winnings from Premium Bonds,

remain exempt from Income Tax.

Banks and building societies now pay interest gross, meaning tax is no longer deducted automatically at source. Where tax becomes payable on savings income, HMRC may collect this through Self Assessment or by adjusting a taxpayer’s PAYE code.

If too much tax has been paid on savings income, a repayment claim can usually be submitted to HMRC. In most cases, claims can be backdated for up to four tax years. For example, claims relating to the 2022/23 tax year must generally be submitted by 5 April 2027.

If you are self-employed or carry on business through a partnership, you may be entitled to claim tax relief where your business makes a trading loss. There are several reliefs available depending on your circumstances, although each loss can only be relieved once and different conditions and claim deadlines apply.

For the 2025/26 tax year, trading losses may generally be offset against your total income of the current tax year and/or the previous tax year (2024/25). Where relief is claimed, losses must normally be used as far as possible in one year before any remaining balance can be utilised elsewhere. If losses are not fully relieved against income, any unused amount may, in certain circumstances, be available to offset against chargeable gains.

Additional relief may be available for new businesses under the early years loss relief rules. Where losses arise within the first four tax years of trading, they may be carried back and set against total income of the previous three tax years (currently 2022/23, 2023/24 and 2024/25), starting with the earliest year first. Claims are generally subject to statutory time limits and, for 2025/26 losses, will normally need to be made by 31 January 2028.

Where losses remain unused, they can usually be carried forward indefinitely and offset against future profits arising from the same trade.

In some circumstances, where a sole trade or partnership business is transferred into a company, additional reliefs may be available following incorporation. The availability of these reliefs will depend on the facts and should be reviewed carefully before restructuring.

If a business ceases trading, terminal loss relief may apply. This allows qualifying losses arising in the final 12 months of trade to be carried back and offset against profits of the same trade for up to the previous three tax years, beginning with the most recent year first.

Tax relief for losses is not available in all circumstances. Relief may be restricted where HMRC considers the trade is not carried on commercially or there is no genuine intention to make a profit. In addition, certain Income Tax reliefs remain subject to an overall cap, generally limited to the higher of £50,000 or 25% of adjusted total income.

Given the interaction between the various loss relief provisions, professional advice should be taken to ensure relief is claimed in the most tax-efficient manner.

Continuing to work after reaching State Pension age can affect your National Insurance position, although your Income Tax obligations generally remain unchanged.

Once you reach State Pension age, you will normally stop paying employee National Insurance contributions (Class 1 NICs) on employment income. However, employers remain liable to pay employer (secondary) Class 1 NICs in the usual way.

If you are employed, your employer may require evidence that you have reached State Pension age before stopping employee National Insurance deductions. This can usually be satisfied by providing proof of age, such as a passport or birth certificate. Alternatively, confirmation can be obtained from HMRC (commonly referred to as an age exception certificate).

For self-employed individuals, Class 2 National Insurance contributions are no longer mandatory following changes introduced from 6 April 2024. In addition, liability to Class 4 National Insurance contributions ends from the start of the tax year following the tax year in which State Pension age is reached. For example, if State Pension age is reached during the 2026/27 tax year, Class 4 NICs would continue to apply until 5 April 2027 and would cease from 6 April 2027.

Although National Insurance contributions may no longer apply, Income Tax continues to be payable where total taxable income exceeds the available Personal Allowance.

Individuals should also continue to meet any reporting obligations, including submitting a Self Assessment tax return where required. Where excess tax or National Insurance has been paid, it may be possible to reclaim the overpayment from HMRC.

Transfers of assets between spouses or civil partners are generally exempt from an immediate Capital Gains Tax (CGT) charge. Where an asset is gifted or transferred between spouses or civil partners, the disposal is normally treated for CGT purposes on a “no gain, no loss” basis.

This means that no CGT is payable at the time of transfer. Instead, the receiving spouse effectively inherits the transferring spouse’s original acquisition cost and ownership history. When the asset is eventually sold to a third party, any capital gain will be calculated by reference to the original purchase price rather than the market value at the date of transfer. It is therefore important to retain records of the original acquisition cost and associated documentation.

There are, however, some important exceptions to this treatment.

The no gain/no loss rules generally do not apply where spouses or civil partners are separated and have not lived together at any point during the tax year in which the transfer takes place. In addition, the relief is not available where assets are transferred as trading stock for use within the recipient’s business. In these circumstances, the transfer is normally treated as taking place at market value and may give rise to an immediate CGT liability for the transferor.

Similar principles apply to gifts made to charities. In most cases, outright gifts to qualifying charities are exempt from Capital Gains Tax. However, where an asset is sold to a charity for consideration that exceeds the original acquisition cost but is below market value, a chargeable gain may still arise based on the actual sale proceeds received.

As with all CGT matters, the timing of the transfer and the nature of the asset can significantly affect the outcome, so professional advice should be sought where material values are involved.

Many taxpayers are surprised to discover that their effective rate of Income Tax can rise to 60% once income exceeds £100,000, even though there is no official 60% tax band in the UK tax system. This arises due to the gradual withdrawal of the Personal Allowance.

For the 2026/27 tax year, the standard Personal Allowance is £12,570. However, where an individual’s adjusted net income exceeds £100,000, the allowance is reduced by £1 for every £2 of income above this threshold.

This rule applies irrespective of age and means that any additional taxable income above £100,000 can trigger both Income Tax on the extra earnings and a reduction in the tax-free allowance available.

The impact can be illustrated as follows:

If an individual has adjusted net income of £100,000, they would normally retain their full Personal Allowance.

If income increases by £1,000 to £101,000:

• The additional £1,000 is taxed at 40% = £400;
• The Personal Allowance is reduced by £500; and
• That additional £500 of income becomes taxable at 40% = £200.

As a result, the total additional tax payable on the extra £1,000 of income becomes £600, producing an effective marginal tax rate of 60%. This position continues until adjusted net income reaches £125,140, at which point the Personal Allowance is fully withdrawn.

Adjusted net income broadly refers to total taxable income before Personal Allowances, less certain deductions and reliefs, including:

• Qualifying pension contributions;
• Gift Aid charitable donations;
• Certain trading losses; and
• Other allowable tax reliefs.

Individuals affected by this “Personal Allowance trap” should consider proactive tax planning. Depending on circumstances, reducing adjusted net income below £100,000 may be achieved through:

• Increasing pension contributions;
• Making charitable donations under Gift Aid; or
• Considering other tax-efficient investment arrangements where appropriate.

Professional advice should be obtained before implementing planning strategies to ensure they remain suitable and commercially appropriate.

Dividend income is taxed differently from employment income and other forms of taxable income, with separate allowances and tax rates applying depending on your overall income position.

You do not pay tax on dividends covered by your Personal Allowance (2026/27: £12,570), provided this has not already been used against other income. In addition, there is a separate Dividend Allowance of £500 per annum, meaning the first £500 of dividend income above your Personal Allowance is taxed at 0%. Any dividend income exceeding these allowances is subject to Income Tax.

For the 2026/27 tax year, dividend tax rates are:

• Basic Rate: 10.75%
• Higher Rate: 35.75%
• Additional Rate: 39.35%

To determine the applicable rate, dividend income is added to your other taxable income. As a result, dividend income may push part or all of your income into a higher tax band, meaning different portions of dividends can be taxed at different rates.

If your total dividend income is £10,000 or less, you may ask HMRC to collect the tax due through an adjustment to your PAYE tax code, allowing the tax to be collected gradually through your salary or pension. Alternatively, if you already complete a Self Assessment tax return, the dividend income can be reported there.

You do not normally need to notify HMRC if your dividend income falls entirely within the available Dividend Allowance and no additional tax is payable.

If you receive more than £10,000 of dividend income in a tax year, you will generally be required to complete a Self Assessment tax return. If you do not normally file a tax return, you should register with HMRC by 5 October following the end of the relevant tax year in which the dividend income was received.

Most self-employed individuals are required to pay Class 4 National Insurance Contributions (NICs) through the Self Assessment system.

For the 2026/27 tax year, Class 4 NICs become payable where taxable self- employed profits are £12,570 or more per annum.

The current Class 4 NIC rates are:

• 6% on profits between £12,570 and £50,270; and
• 2% on profits above £50,270.

However, certain categories of individuals are exempt from paying Class 4 NICs, including:

• Individuals under age 16 at the beginning of the tax year;
• Individuals who have reached State Pension age before the start of the tax year (note that reaching State Pension age during the tax year does not remove liability for that year); and
• Individuals receiving profits solely in their capacity as a trustee, executor, or administrator under the relevant tax legislation.

From 6 April 2024, the mandatory requirement for self-employed individuals to pay Class 2 National Insurance Contributions was abolished.

Despite this change, making voluntary Class 2 NIC contributions may still be beneficial for certain individuals who would not otherwise build National Insurance credits through Self Assessment. Voluntary Class 2 contributions can help preserve entitlement to contributory benefits, including the State Pension.

Before making voluntary contributions, it is important to confirm that doing so would provide a genuine benefit based on the individual’s National Insurance record and future entitlement position.

For the 2026/27 tax year, the voluntary Class 2 NIC rate is £3.65 per week.

Most self-employed individuals continue to settle National Insurance liabilities through the Self Assessment process. However, certain categories of self-employed workers — for example examiners, moderators, invigilators, and ministers of religion who do not receive employment income — may not automatically pay National Insurance through Self Assessment and may wish to consider voluntary contributions where appropriate.