Reducing administrative burden on charities

Audit income threshold to increase.

Scottish charities are set to benefit from changes to legislation which will raise the audit income threshold from £500,000 to £1 million.

Secondary legislation has been laid in the Scottish Parliament which, subject to approval by MSPs, will come into force on 1 January next year.

That means 93% of Scotland’s 24,500 charities won’t need an audit once the new rules come into force, reducing their administrative and financial burdens.

It’s important that charity regulation not only meets the needs of charities, but is fair and works well.

We recognise the real financial pressures on charities particularly the challenges they face as a result of the UK government’s increase to employers’ national insurance contributions.

We have listened and responded with this change to the audit income threshold. This means that only around 93% of charities registered in Scotland will require an audit.

Charities will still be held to high standards because they are accountable to the public.

– SOCIAL JUSTICE SECRETARY SHIRLEY-ANNE SOMERVILLE

The change responds to feedback from charities about rising costs and the limited availability of specialist charity auditors.

I very much welcome this move by Scottish Government. The threshold for requiring a full audit has been static for decades, placing a burden on small charities who simply can’t afford the cost or the time. There is also a shortage of auditors prepared to take on such small pieces of work.

– CHIEF EXECUTIVE OF SCVO ANNA FOWLIE

Background

The Charities Accounts (Scotland) Amendment Regulations 2025

In addition to the increase to the audit income threshold, the revised regulations reflect changes in the Charities (Regulation and Administration) (Scotland) Act 2023 and update references to the Charities Statement of Recommended Practice (SORP) and the Further and Higher Education SORP, both of which have been revised in 2025.

The increased audit income threshold will apply to financial years beginning on or after 1 January 2026.