From 1 January 2026: New SORP rules for Charities

The updated Charities SORP, the statement of recommended practice for charities regarding the preparation of their accounts, will come into effect for accounting periods beginning on or after 1 January 2026. One of the new elements covers the way charities report on leases, including whether provision for dilapidations needs to be made in a charity's reporting. 

Dilapidations relate to a tenant’s obligations under a lease in connection with the cost of returning the premises in the state required by the lease, at the end of the lease. This may include matters such as repairing the premises and removing alterations that have been made.

This is an area that can be complex and the SORP-making body has stated its awareness that “this will be a challenging area for charities to understand and to make the necessary changes”.

In the Charity Commission's press release regarding the rules, David Holdsworth, the Chief Executive of the Charity Commission, said:

“Clear and transparent reporting is essential to maintaining public trust in charities. People want reassurance that their donations are being used effectively to support good causes. We hope the updated SORP helps charities achieve this by enabling them to communicate both their financial position and the impact of their work more effectively”.

As stated on the SORP microsite, developed by charity regulators, charities should review lease arrangements, identify the appropriate approach, and seek professional advice if needed. At Stone King, we have an expert team who can advise on the legal aspects of lease arrangements and work with accountants and other advisers as required.