Every registered charity in England and Wales faces the same question at year-end: does this charity need external scrutiny, and if so, what kind? The answer turns entirely on gross income and, at one key point, gross assets. This guide walks through each income band, explains who can act as examiner, covers the accounts format rules that run alongside the scrutiny gates, and flags the situations where your governing document or a funder can push the requirement higher. Scotland is a different regime and is addressed separately below.
The short answer: the scrutiny gates at a glance
In England and Wales, the scrutiny requirement for a registered charity is decided by gross income. For financial years ending before 30 September 2026: at or below £25,000 the Charities Act requires no external scrutiny. Above £25,000 an independent examination is required. Above £1 million gross income, or above £250,000 gross income combined with gross assets over £3.26 million, a statutory audit is mandatory and independent examination is no longer permitted. Those three gates cover almost every England and Wales registered charity.
The thresholds rise on 30 September 2026. Following a DCMS consultation, higher thresholds apply to financial years ending on or after 30 September 2026: no external scrutiny up to £40,000, a qualified examiner (and accruals accounts) above £500,000, and a statutory audit above £1.5 million gross income, or above £500,000 income with gross assets over £5 million. Financial years ending before that date keep the figures in the table below. Source: gov.uk, changes to charity accounting and reporting.
| Gross income | Gross assets | Required scrutiny |
|---|---|---|
| £25,000 or below | Any | None (governing document may impose one) |
| Over £25,000 up to £250,000 | Any | Independent examination (any independent person with requisite ability) |
| Over £250,000 up to £1 million | £3.26 million or below | Independent examination (qualified examiner required) |
| Over £250,000 up to £1 million | Over £3.26 million | Statutory audit mandatory |
| Over £1 million | Any | Statutory audit mandatory |
For financial years ending on or after 30 September 2026, the equivalent table is:
| Gross income | Gross assets | Required scrutiny |
|---|---|---|
| £40,000 or below | Any | None (governing document may impose one) |
| Over £40,000 up to £500,000 | Any | Independent examination (any independent person with requisite ability) |
| Over £500,000 up to £1.5 million | £5 million or below | Independent examination (qualified examiner required) |
| Over £500,000 up to £1.5 million | Over £5 million | Statutory audit mandatory |
| Over £1.5 million | Any | Statutory audit mandatory |
Use the independent examination vs audit checker to confirm which category applies to your charity this year. The sections below walk through the pre-30 September 2026 figures; for financial years ending on or after that date, substitute the higher gates from the second table.
When no external scrutiny is required (at or below £25,000)
Once gross income falls at or below £25,000, the Charities Act 2011 does not require any external scrutiny of the accounts. Trustees prepare the accounts and the trustees annual report, file them with the Charity Commission (where the charity is required to file), and no independent examination or audit is needed on the face of statute.
This does not mean scrutiny is always absent. Two situations can still require it at this income level:
- Governing document: If the charity's constitution, trust deed or royal charter explicitly requires an examination or audit, trustees must comply with that requirement regardless of income. The governing document sits alongside the statute, not beneath it.
- Funder requirement: A grant-maker, local authority or other funder may make an audit or examination a condition of funding. This is a contractual obligation, not a statutory one, but it is equally binding on the trustees for that grant year.
Source: Charity Commission CC31 guidance.
The independent examination band (over £25,000)
Once gross income exceeds £25,000, trustees must arrange external scrutiny. For most charities in this band, that scrutiny takes the form of an independent examination. An independent examination is a less extensive (and less costly) process than a full statutory audit: the examiner reviews the accounts and supporting records and prepares a report stating whether anything has come to their attention that the accounts are not consistent with the records or do not comply with the requirements of the Charities Act.
An independent examination is not an audit. The examiner does not express an opinion that the accounts give a true and fair view. That distinction matters: if a funder or lender is looking for an audit opinion specifically, an examination report will not satisfy that requirement.
The examiner must be independent of the charity. A trustee, employee, close family member of a trustee, or anyone else with a conflict of interest cannot act as examiner. The Charity Commission's CC31 guidance sets out the independence requirements in full.
Source: Charity Commission CC31 guidance.
When an audit becomes mandatory (over £1 million, or over £250,000 with gross assets over £3.26 million)
A statutory audit is mandatory, and independent examination is no longer permitted, when either of two gates is crossed. First: gross income exceeds £1 million in the financial year. Second: gross income exceeds £250,000 AND gross assets at the year-end balance sheet date exceed £3.26 million. Both conditions of the second gate must be met simultaneously; if gross assets are £3.26 million or below, independent examination remains available up to £1 million income.
These thresholds are set by the Charities Act 2011 (as amended) and are confirmed in full in CC31 full guidance. The Charity Commission has very limited discretion to approve an examination instead of an audit above these gates; in practice that route is not available to most charities.
A statutory audit must be carried out by a registered auditor (a firm or individual registered with one of the UK Recognised Supervisory Bodies). The auditor expresses an opinion that the accounts give a true and fair view and comply with the relevant financial reporting framework, SORP and applicable law.
Governing-document or funder clauses can require an audit below either statutory threshold. If your constitution or a major grant agreement says "audited accounts", the charity must obtain an audit even if gross income is, for example, £400,000 and gross assets are £1 million.
Who can act as your independent examiner (the £250,000 qualified-examiner rule)
Where gross income exceeds £250,000, the independent examiner must hold a current membership of one of the bodies listed in the Charities Act 2011. The permitted bodies are: ICAEW, ICAS, ICAI, ACCA, AAPA, AAT, AIA, CIMA, the Chartered Governance Institute, CIPFA, ACIE, IFA, and CPAA. Membership of one of these 13 bodies is a legal requirement at this income level, not a quality preference.
Where gross income is £250,000 or below, any independent person with the requisite ability and practical experience may act as examiner. There is no membership requirement, though trustees remain responsible for satisfying themselves that the person they appoint has the knowledge and skills to carry out a proper examination.
Source: CC31 full guidance, qualified-examiner section.
See our separate guide on who can do an independent examination for a fuller treatment of the examiner-qualification rules and how to verify a prospective examiner's membership.
Receipts and payments vs accruals: how the £250,000 line changes your accounts
The same £250,000 income threshold that triggers the qualified-examiner requirement also determines which accounting format the charity must use. This matters because the examiner's job is different depending on the format they are reviewing.
Non-company charities with gross income of £250,000 or below may prepare receipts and payments accounts (a simpler cash-in, cash-out statement). Charitable companies, and all charities with gross income over £250,000, must prepare accruals accounts following the Charities SORP (FRS 102).
| Charity type | Gross income | Permitted accounts format |
|---|---|---|
| Non-company charity (trust, unincorporated association, CIO) | £250,000 or below | Receipts and payments or accruals (trustees' choice) |
| Non-company charity | Over £250,000 | Accruals (SORP) required |
| Charitable company | Any | Accruals (SORP) required |
Source: CC31 full guidance and CC15d (Charity Commission).
Accruals accounts are more complex to prepare and to examine. If your charity is approaching the £250,000 threshold it is worth planning the transition to accruals accounts in advance rather than switching format at short notice. Our charity accounts service covers both formats.
Governing-document and funder overrides (audits forced below the statutory gates)
The statutory thresholds in the Charities Act set the floor; they do not set the ceiling. Two categories of override can require a higher standard of scrutiny regardless of income or assets.
Governing-document clauses. Many older trusts, endowments and charitable companies were constituted at a time when audit requirements were set at a lower income level, or when the founders simply wanted stronger governance. Those clauses remain binding. Trustees cannot unilaterally disapply a governing-document requirement, even if the Charity Commission itself no longer requires the same standard at that income level. The only route to removing such a clause is usually a scheme or governing-document amendment, which requires Commission approval where the charity is below a certain size.
Funder requirements. Grant agreements, service-level agreements with local authorities, and some trust deed conditions impose external audit as a grant condition. These sit outside the Charities Act entirely and must be read case by case. A charity that is below the statutory audit threshold but is in receipt of a substantial public-body grant will often face an audit requirement that way.
If your charity has a governing-document or funder audit requirement you did not expect, review the relevant document carefully before proceeding. An independent examination report will not satisfy an explicit "audited accounts" clause.
Scotland is different
The scrutiny thresholds described throughout this guide apply to charities registered in England and Wales with the Charity Commission. Scottish charities are regulated by OSCR (the Office of the Scottish Charity Regulator) and operate under a different statutory framework with different scrutiny requirements.
If your charity is registered in Scotland, do not rely on the England and Wales thresholds. Consult OSCR's own accounts and reporting guidance directly. The IE-vs-audit checker on this site does not answer for Scottish charities and will direct you to OSCR.
Northern Ireland charities are regulated by the Charity Commission for Northern Ireland (CCNI) and also operate under different rules. Content on this site defaults to England and Wales throughout.
Check your charity now
Use the interactive checker below to confirm which scrutiny category applies to your charity based on this year's gross income and gross assets. The checker applies the England and Wales statutory thresholds and flags governing-document and funder considerations to review.
Open the independent examination vs audit checker
If the checker confirms you need an independent examination or are approaching the audit threshold, you can find out more about how an independent examination works or review our charity accounts service for end-to-end year-end support.
Frequently asked questions
Does a small charity need an audit?
Not as a matter of statute. In England and Wales, the Charities Act requires no external scrutiny for charities with gross income at or below £25,000 (£40,000 for financial years ending on or after 30 September 2026). A statutory audit is only mandatory above £1 million gross income, or above £250,000 gross income combined with gross assets over £3.26 million (£1.5 million, £500,000 and £5 million respectively for years ending on or after that date). Below those gates an independent examination (not an audit) is the required scrutiny for charities over the examination threshold. That said, a governing-document clause or funder requirement can impose an audit at any income level.
What income level triggers an independent examination?
An independent examination is required once gross income exceeds £25,000 in a financial year ending before 30 September 2026, or £40,000 in a financial year ending on or after that date. At or below the gate, no external scrutiny is required by statute (though the governing document or a funder may still require one). The requirement continues until income exceeds the audit thresholds, at which point a full statutory audit replaces the examination.
Can any accountant do an independent examination?
It depends on the charity's income. Where gross income is at or below the qualified-examiner threshold (£250,000, or £500,000 for financial years ending on or after 30 September 2026), any independent person with the requisite ability and practical experience may act as examiner: there is no requirement for a professional qualification. Where gross income exceeds that threshold, the examiner must hold a current membership of one of the 13 bodies listed in the Charities Act (ICAEW, ICAS, ICAI, ACCA, AAPA, AAT, AIA, CIMA, the Chartered Governance Institute, CIPFA, ACIE, IFA, or CPAA).
What if our constitution requires an audit?
The charity must comply with its governing document. A constitutional requirement for an audit applies regardless of whether the Charities Act would require only an examination at that income level. Trustees cannot set aside a governing-document clause without a formal amendment or scheme. If the clause was inserted many years ago and is now disproportionate, the Charity Commission may be willing to assist with an amendment, but that process takes time and cannot be bypassed in the current year.
Do CIOs have different scrutiny thresholds?
No. Charitable incorporated organisations (CIOs) follow the same England and Wales scrutiny thresholds as other charities: external scrutiny required over £25,000, audit mandatory over £1 million (or £250,000 with gross assets over £3.26 million), with the same rise to £40,000, £1.5 million, £500,000 and £5 million for financial years ending on or after 30 September 2026. CIOs do benefit from single registration (with the Charity Commission only, unlike charitable companies which must also register at Companies House), but the accounts and scrutiny rules are the same.
What counts as gross income for the threshold?
Gross income means total income before any deductions, as shown in the charity's statement of financial activities (or income and expenditure account for receipts and payments charities). This includes donations, grants, Gift Aid receipts, trading income, investment income and any other receipts. It is not the same as net income or surplus. The Charity Commission's CC31 guidance and the SORP are the authoritative references for what is included.
What happens if we skip the examination?
Failing to arrange the required scrutiny is a breach of the Charities Act and of trustees' legal duties. The Charity Commission can take regulatory action against the charity and against individual trustees. Accounts filed without the required examination or audit report are also incomplete for Charity Commission filing purposes. Beyond the regulatory risk, it undermines public trust in the charity's governance, which can affect donor confidence and future funding.
Is an IE cheaper than an audit?
Generally yes: an independent examination is a less extensive process than a statutory audit and typically costs less. However, costs vary by charity size, complexity, the format of the accounts (receipts and payments vs accruals) and the examiner or firm engaged. This site does not publish fee figures; contact us for details specific to your charity's circumstances.
Can the Commission order an audit?
Yes. The Charity Commission has the power to require a charity to have its accounts audited even where the statutory thresholds would not require one. This power is used as part of the Commission's regulatory and inquiry functions. In practice it is exercised in cases of concern about governance or financial management, not routinely.
Do Scottish charities follow the same thresholds?
No. Scottish charities are regulated by OSCR under a separate statutory framework. The England and Wales thresholds (£25,000 external scrutiny gate, £1 million audit gate, £250,000 qualified-examiner rule) do not apply in Scotland. Scottish trustees should consult OSCR's accounts and reporting guidance directly.