June Policy Update
Here's some news from around the charity sector.
Here’s your monthly roundup of key policy updates and developments from across the charity sector. In this edition, we cover the latest on SORP, the 2025 Spending Review, Changes to Charity Law Thresholds, and the new Grants for Good report.
Get ready for the new SORP
From January 2026, charity annual reports and accounts will undergo significant changes. The Statement of Recommended Practice (SORP), which turns international accounting standards into rules for UK charities, is getting a long-awaited update. This matters – SORP underpins how charities demonstrate transparency, accountability, and regulatory compliance. The consultation closed on 20 June, with a final version expected in the autumn.
Key proposals include a new tiered system based on charity size, and expanded reporting requirements for trustees, covering areas like volunteering, sustainability and impact. The updated SORP will apply to all Charitable Incorporated Organisations (CIOs), charities using accruals accounting, and charitable companies. Small charities using receipts and payments accounting remain exempt, unless their governing document says otherwise. While the consultation period has been generous, the short implementation window means trustees and finance leads should start preparing now.
DSC has responded to the consultation with recommendations to delay some of the heavier requirements and reduce burdens for smaller charities. We’ll keep you posted once the final version is confirmed. View our response to the consultation and find out more here.
Spending Review 2025
The government’s 2025 Spending Review, announced by Chancellor Rachel Reeves, sets the course for departmental budgets up to 2029/30. It provides long-term funding plans not just for Whitehall, but for devolved and local governments too – crucial for many of the public services that charities support or interact with. With pressure mounting across housing, health, education, poverty and social care, this Spending Review offers an important signal for how the new government intends to address growing needs, and where charities fit in.
There are notable investments in social housing and homelessness, with £39 billion earmarked for a new Affordable Homes Programme and almost £1 billion to improve temporary accommodation. In health and social care, NHS funding is set to rise significantly, but plans for social care reform remain vague. Support for free school meals, Winter Fuel Allowance, and a new Crisis and Resilience Fund suggest some movement on poverty, though the government’s more contentious welfare plans remain properly addressed.In particular, the upcoming vote on the Universal Credit and PIP Bill, without full transparency or impact assessment, raises serious concerns about future support for disabled people and the risk of deepening hardship.
While there were few charity-specific announcements, it’s positive to see the Charity Commission’s budget rising and further work planned on social impact investment. Still, the message is clear – charities will need to keep making the case for their role, especially as local government finances remain tight and the demand for support continues to grow. Find out more by reading Jay Kennedy’s article here.
Charity Law Threshold Changes
Trustees are the backbone of the charity sector, with nearly a million people across the UK giving their time, skills and energy to help charities succeed. But with that responsibility often comes red tape, especially when it comes to financial reporting. That’s why the recent consultation from the Department for Culture, Media and Sport (DCMS) on financial thresholds in charity law was such an important opportunity to make trusteeship more manageable.
The consultation, which has now closed, looked at updating the income thresholds that trigger key reporting requirements, like whether a charity needs to prepare accrual accounts, submit an Annual Return, or get a full audit. Many of these thresholds haven’t changed in years, despite inflation pushing more charities into overly complex requirements.
DSC submitted a response calling for more proportionate and rational rules, especially for smaller organisations. If adopted, these changes could reduce unnecessary costs and make it easier for trustees to meet their responsibilities without being overwhelmed. We’ll keep you updated when the government publishes its response but you can view our response here.
Grants for Good Report
DSC’s new research paints a worrying picture of the state of local grant funding to the Voluntary, Community and Social Enterprise (VCSE) sector. The latest Grants for Good report, released in early June, shows that councils facing financial crisis are far more likely to cut back on grants to local charities. In 2023/24, 71% of financially at-risk councils reduced their grant spending, compared to just 46% of those not facing the same pressures.
As more councils issue Section 114 notices, the local government equivalent of bankruptcy, the knock-on effects for local communities are stark. Grants from councils often fund critical services, especially for the most vulnerable. This second edition of DSC’s report builds on previousresearch, with new analysis of the rising number of councils in financial crisis and how that’s directly impacting voluntary and community organisations. It’s a clear call to action: protecting local grant-making must be part of any plan to stabilise government finances and local services.
