What is a reserves policy?

A reserves policy explains how much unrestricted money (reserves) your charity aims to hold, and the reasons for that target. "Unrestricted" means funds that are not tied to a specific purpose by the donor or a grant condition.

The policy should answer three questions:

1. How much do we hold in reserves right now?
2. How much should we hold, and why?
3. What will we do if reserves are above or below our target?

Why it matters

The Charity Commission's reporting guidance requires charities to include a statement about reserves in their trustees' annual report. Funders frequently check reserves levels before awarding grants — a charity with 3 years of expenditure sitting in the bank and no policy explaining why may struggle to justify a funding application.

At the other end, a charity with no reserves and no plan for building them is financially vulnerable. A reserves policy helps trustees have an honest conversation about financial sustainability.

How to set your reserves target

There is no single "correct" level of reserves. The right amount depends on your charity's circumstances:

Consider your expenditure commitments: If your charity has fixed costs (rent, insurance, staff salaries), you need enough reserves to cover these for a reasonable period if income stopped. For a charity with no staff and no fixed premises, this could be very low.

Consider your income stability: Charities that rely on a single funding source need higher reserves than those with diverse income streams. If 80% of your income comes from one grant, what happens when that grant ends?

Consider your plans: If you are saving for a specific purpose (equipment, a building project), include this in your policy.

Common target ranges:

• 3-6 months of operating costs — the most common target for small charities with some fixed costs
• 6-12 months — appropriate if income is volatile or depends on a single source
• Below 3 months — may be acceptable for charities with no fixed costs and stable income, but explain why

What to include in your policy

A practical reserves policy for a small charity should cover:

1. Current reserves level State the amount of unrestricted reserves at the end of the most recent financial year.

2. Target range Set a minimum and maximum. A range is better than a single number because it allows for normal fluctuation. For example: "The trustees aim to hold between 3 and 6 months of annual operating costs in unrestricted reserves."

3. Rationale Explain why you chose this range. Reference specific risks: "The charity's venue hire costs £X per year and cannot be reduced at short notice. Three months of reserves covers this commitment while alternative funding is secured."

4. Action plan if reserves are outside the range

• Below minimum: How will you build reserves? Reduce spending? Increase fundraising? Apply for a specific grant?
• Above maximum: How will you deploy excess reserves? Fund a specific project? Increase service delivery?

5. Review schedule State how often the policy will be reviewed. Annually is standard — align it with your financial year end and trustees' annual report preparation.

Template

Here is a practical template you can adapt:

Reserves Policy — [Charity Name]

Approved by trustees: [Date] Review date: [Date — typically 12 months later]

Current unrestricted reserves: £[amount] as at [date of last accounts]

Target range: The trustees aim to hold unrestricted reserves equivalent to [X] to [Y] months of annual operating costs, currently £[amount] to £[amount].

Rationale: This target reflects [the charity's fixed cost commitments / income volatility / planned expenditure]. Specifically: [list the key factors, e.g., "annual venue hire of £X, insurance of £Y, and the risk of the main grant ending"].

If reserves fall below the minimum: The trustees will [reduce discretionary spending / prioritise unrestricted fundraising / review commitments].

If reserves exceed the maximum: The trustees will [allocate excess to [specific project or purpose] / increase service delivery].

Review: This policy is reviewed annually alongside the preparation of the trustees' annual report.

Common mistakes

No rationale. Stating "we hold 6 months of reserves" without explaining why is not a policy — it is a number. The Charity Commission wants to see the reasoning.

Never reviewing it. A reserves policy written 5 years ago with outdated figures is worse than no policy at all. Review annually.

Confusing restricted and unrestricted funds. Restricted funds (money given for a specific purpose) are not reserves. Your reserves policy covers unrestricted funds only.

For a broader view of your compliance obligations, see our charity compliance checklist.

This guide applies to charities registered in England and Wales. This is general guidance, not financial advice.

Sources

• Prepare a charity annual return — GOV.UK
• Charity Governance Code 2025 — Principle 6: Managing Resources and Risks

It is not. The steps are straightforward once you understand them. This guide covers everything from registration through to submitting your claim.

How Gift Aid works

When a UK taxpayer donates to your charity and completes a Gift Aid declaration, your charity can reclaim the basic rate of income tax (20%) on that donation from HMRC. The donor gives £10, your charity claims £2.50 from HMRC, making the donation worth £12.50 in total.

The key requirement is that the donor must have paid at least as much UK income tax or capital gains tax in the relevant tax year as the Gift Aid claimed on all their donations to all charities combined. If they have not, HMRC can ask the donor to repay the difference.

Step 1: Register with HMRC for Gift Aid

Your charity must be registered with HMRC before you can claim. This is separate from your Charity Commission registration.

To register, your charity needs:

• A Charity Commission registration number (or HMRC recognition for exempt charities)
• Two nominated contacts who are authorised to act on the charity's behalf with HMRC
• Your charity's bank account details

Register through HMRC's online service. The process typically takes a few weeks. Once approved, you receive a Charities Reference Number which you use for all Gift Aid claims.

Step 2: Collect Gift Aid declarations

A Gift Aid declaration is the donor's written confirmation that they want your charity to claim Gift Aid on their donation. Each declaration must include:

• The donor's full name
• Their home address
• A statement that they are a UK taxpayer
• Confirmation that they want the charity to treat their donation (and, if applicable, future donations) as Gift Aid
• The date

Declarations can be:

• Written — a signed paper form
• Online — a web form or email
• Verbal — over the phone, provided you send written confirmation afterwards

Single vs. ongoing declarations: A single declaration covers one donation. An ongoing declaration covers all donations from that date forward until the donor cancels it. Ongoing declarations are more practical for regular donors — you collect the declaration once and it covers all future gifts.

Keeping records: You must keep each declaration for at least 6 years after the last donation it covers. This is the single most important record-keeping requirement for Gift Aid. If HMRC audits your claims and you cannot produce the declaration, the claim will be disallowed.

Step 3: Submit your claim to HMRC

Submit claims through HMRC's Charities Online service. You can claim in one of two ways:

Online spreadsheet: For smaller numbers of donations, enter details directly into the online form. You need the donor's name, donation date, and amount for each line.

CSV file upload: For larger batches, prepare a spreadsheet in HMRC's required format and upload it. This is more efficient if you have dozens or hundreds of donations to claim.

Claim timing: Claims can cover donations received in the last 4 tax years. There is no requirement to claim monthly — most small charities batch claims quarterly or annually. Pick a schedule that works for your volunteers and stick to it.

Payment: HMRC typically pays Gift Aid claims within 4-6 weeks. The money is paid directly into your charity's bank account.

The Gift Aid Small Donations Scheme (GASDS)

The Gift Aid Small Donations Scheme lets your charity claim a top-up payment on small donations (£30 or less per donation) without needing a Gift Aid declaration from each donor.

How it works: You can claim the same 25% top-up on eligible small donations — cash donations of £30 or less, and contactless card donations of £30 or less. The maximum you can claim through GASDS in one tax year is matched to your Gift Aid claims, up to a cap of £8,000 in donations (yielding £2,000 in top-up payments).

Eligibility: Your charity must have been registered with HMRC for at least 2 complete tax years and have made a successful Gift Aid claim in at least 2 of the last 4 tax years.

Why it matters for small charities: Collection-plate donations, bucket collections, and small cash gifts at events are exactly the donations where getting a formal declaration from each donor is impractical. GASDS fills this gap.

Common mistakes to avoid

Invalid declarations: The most common error. Declarations without a home address, without the taxpayer confirmation statement, or that are undated. Check your template against HMRC's guidance on valid declarations.

Claiming on ineligible donations: Gift Aid only applies to donations — freely given money with no benefit in return. If the donor receives something in return (raffle tickets, auction items, event entry beyond a token amount), the payment is not a donation and Gift Aid cannot be claimed. The "benefit threshold" rules are specific — check the limits before claiming.

Not checking donor tax status: You are not required to verify that each donor has paid enough tax. But if a donor tells you they are no longer a UK taxpayer, you must stop claiming on their donations from that point. Include a note on your declaration forms reminding donors to notify you if their tax status changes.

Forgetting to claim: Gift Aid is not automatic. HMRC does not know which donations your charity has received. If you do not submit a claim, you do not receive the money. Set a recurring calendar reminder to batch and submit claims.

Losing declarations: If HMRC audits your claims and you cannot produce the declaration for a specific donor, the entire claim for that donor's donations is disallowed. Keep declarations in a secure, organised system — not loose in a drawer.

Gift Aid and fundraising events

Fundraising events create Gift Aid confusion. The rule is simple: Gift Aid only applies to the donation element, not to any goods or services the donor receives in return.

• Sponsored event (e.g., sponsored walk): The sponsorship is a donation. Gift Aid applies.
• Charity dinner: If the ticket costs £50 and a comparable dinner costs £30, the donation element is £20. Gift Aid applies to £20, not £50.
• Raffle tickets: Not a donation. Gift Aid does not apply.
• Auction items: Not a donation. The bidder receives something in return.
• Cake sale: Not a donation. The buyer receives cakes.

FAQ

How far back can I claim Gift Aid? You can claim on donations received in the last 4 tax years. If your charity has not been claiming, you may be able to recover several years of unclaimed Gift Aid.

Can we claim Gift Aid on regular standing orders? Yes, provided you have a valid Gift Aid declaration from the donor. An ongoing declaration covers all future donations until cancelled.

Do we need to claim Gift Aid separately from our annual return? Yes. Gift Aid is claimed through HMRC, not the Charity Commission. The two processes are entirely separate.

For a broader view of your compliance obligations, see our charity compliance checklist. Check which obligations apply to your charity with our free Compliance Checklist Generator.

This guide applies to charities recognised by HMRC for tax purposes in the UK. Gift Aid rules are set by HMRC and may change. This is general guidance, not tax advice — consult your accountant or HMRC directly for advice specific to your charity's circumstances.

Sources

• Claim Gift Aid — GOV.UK
• Gift Aid — GOV.UK
• Gift Aid Small Donations Scheme — GOV.UK
• Gift Aid declarations — GOV.UK
• Get recognition from HMRC for your charity — GOV.UK

This guide breaks down each principle with practical self-assessment questions aimed at small charities — the ones run by volunteer trustees who meet quarterly and manage everything in shared folders.

How the Code works: "apply or explain"

The Charity Governance Code is not a legal requirement. No regulator will fine you for not following it. But the Charity Commission references it in guidance, grant funders increasingly ask about governance standards, and — most importantly — it helps boards identify blind spots before they become problems.

The approach is "apply or explain": for each principle, your board either demonstrates how it applies the principle, or explains why it has chosen a different approach given its circumstances. A small charity with three trustees and no staff will apply the principles very differently from a national charity with a paid CEO and 50 employees. Both are valid.

The eight principles

1. Foundation

What it means: Your charity has a clear legal basis, an appropriate legal form, and a governing document that is fit for purpose.

Self-assessment questions for small charities:

• When did your board last review the governing document (constitution, trust deed, or articles)?
• Does your governing document reflect how your charity actually operates today?
• Are all trustees aware of the charity's objects and powers?
• Is your charity registered with the correct regulator for its legal form?

Common gap: Many small charities have not updated their governing document in 10+ years. If your charity has changed what it does, who it serves, or how it raises funds, the governing document may need updating. The Charity Commission publishes guidance on amending governing documents.

2. Organisational Purpose

What it means: Your charity has a clear mission, a strategy for achieving it, and a way to measure whether it is making a difference.

Self-assessment questions:

• Can every trustee state the charity's purpose in one sentence?
• Do you have a written strategy or plan, even a simple one?
• How do you measure impact — and do you report on it to stakeholders?
• When did you last review whether the charity's activities still align with its purpose?

Practical tip: A strategy does not need to be a 30-page document. For a small charity, a one-page plan covering objectives, activities, success measures, and a review date is sufficient.

3. Leadership

What it means: The board provides effective leadership, with a clear division between governance (the board) and management (staff or volunteers who deliver services).

Self-assessment questions:

• Does your chair lead meetings effectively and ensure all trustees contribute?
• Is there a clear distinction between what the board decides and what staff/volunteers decide?
• If you have no staff, does the board distinguish between its governance role and its operational role?
• Do you have a succession plan for the chair and other key roles?

Common gap for small charities: When trustees are also the people running activities, the governance/management boundary blurs. The chair runs the jumble sale AND chairs the board meeting. Acknowledge this and agree which decisions need a board vote versus which the chair or treasurer can make independently.

4. Ethics and Culture

What it means: The board sets and models the values, behaviours, and culture of the organisation.

Self-assessment questions:

• Does your charity have a written set of values or a code of conduct for trustees?
• How do you handle disagreements within the board?
• Do trustees feel comfortable raising concerns?
• New in 2025: Does your charity have a policy on the use of technology and AI tools?

The AI policy point: The 2025 Code specifically recommends that charities consider how they use AI and technology. For a small charity, this does not require a lengthy policy — a brief statement covering what tools you use, how you handle personal data in them, and who approves new tools is sufficient.

5. Decision Making

What it means: The board makes informed, transparent decisions that are properly documented.

Self-assessment questions:

• Do your board meeting minutes record the key points of discussion, not just the decisions?
• Do trustees receive papers in advance with enough time to read them?
• How do you handle decisions between meetings (email votes, written resolutions)?
• Are conflicts of interest declared and recorded at every meeting?

Practical tip: Keep a standing item at the start of every trustee meeting: "Declaration of interests." Record it in the minutes even when no one declares anything. This creates a clean audit trail.

6. Managing Resources and Risks

What it means: The board ensures the charity's resources (money, people, reputation) are managed responsibly and risks are identified and addressed.

Self-assessment questions:

• Does your charity have a reserves policy, and is it reviewed annually?
• Do you maintain a risk register, even a simple one?
• Are your financial controls adequate — authorisation limits, dual signatures, bank reconciliation?
• Do you have adequate insurance for your activities?

Common gap: Small charities often skip the risk register because it sounds corporate. A risk register for a village charity might have five entries: loss of key volunteer, safeguarding incident, financial loss/fraud, reputational damage from a complaint, and loss of venue. Each with a simple likelihood/impact rating and a one-line mitigation. That is sufficient.

7. Equity, Diversity and Inclusion

What it means: The board actively considers EDI in its governance, leadership, and service delivery.

Self-assessment questions:

• Does your board reflect the diversity of the community you serve?
• Have you discussed EDI as a board, even informally?
• Are there barriers to becoming a trustee at your charity (meeting times, location, jargon)?
• Do your services reach the people who need them most?

New in 2025: EDI is now a standalone principle (previously embedded within other principles). For small charities, this is about awareness and intent rather than formal EDI programmes. Start by asking whether your board composition and meeting practices exclude potential trustees.

8. Board Effectiveness

What it means: The board has the right mix of skills, invests in trustee development, and reviews its own performance.

Self-assessment questions:

• Do you have a skills audit showing what expertise your board has and what gaps exist?
• Do new trustees receive an induction?
• When did the board last review its own effectiveness?
• Do trustees have access to relevant training or development?

Practical tip: Trustee induction does not need to be a formal programme. A 30-minute conversation with the chair covering the governing document, latest accounts, key policies, and upcoming priorities is a good start. Follow up with the Charity Commission's trustee guidance.

Running your self-assessment

The most effective approach is to work through the principles together at a board meeting or away day. Allocate 10-15 minutes per principle:

1. Read the principle and its expected outcomes
2. Discuss how your charity currently applies it
3. Identify gaps or areas for improvement
4. Agree 1-2 specific actions per principle
5. Set a date to review progress

You do not need to score yourself against every sub-point. Focus on the areas where your board identifies the biggest gaps between what the Code expects and what your charity actually does.

Use our free Governance Code Self-Assessment tool to work through each principle interactively and generate a summary for your board records.

For a broader view of all your compliance obligations, see our charity compliance checklist for 2026.

FAQ

Is the Charity Governance Code mandatory? No. The Code is voluntary. However, the Charity Commission references it in guidance, and some funders ask about governance standards in grant applications. Following the Code demonstrates good practice.

What are the principles of the Charity Governance Code? The 2025 Code has eight principles: Foundation, Organisational Purpose, Leadership, Ethics and Culture, Decision Making, Managing Resources and Risks, Equity Diversity and Inclusion, and Board Effectiveness.

What is "apply or explain" in charity governance? Each charity assesses itself against the Code's principles. Where it follows a principle, it "applies" it. Where it takes a different approach, it "explains" why. Both are acceptable — the point is thoughtful self-assessment, not box-ticking.

This guide applies to charities registered in England and Wales. The Charity Governance Code is published by an independent steering group and applies to all registered charities regardless of size. This is general guidance, not legal advice.

Sources

• Charity Governance Code 2025
• Charity trustee: what's involved — GOV.UK
• How to make changes to your charity's governing document — GOV.UK

If your charity has income under £500,000 and a handful of volunteers, here's how to evaluate software that actually fits.

Start with what you need to do, not what's available

Before comparing products, list the compliance and admin tasks your charity actually manages:

• Annual return preparation — gathering figures, trustee details, accounts
• Trustee meeting admin — agendas, minutes, action tracking
• Policy management — safeguarding, GDPR, complaints, reserves, conflict of interest
• DBS/safeguarding checks — tracking who has been checked and when renewals are due
• Gift Aid claims — managing declarations and submitting to HMRC
• Governance code self-assessment — working through the 2025 Charity Governance Code principles

Most small charities handle these across a patchwork of spreadsheets, shared Google Drive folders, and free templates. That works until someone misses a renewal date or cannot find last year's policy version before a trustee meeting.

The features that actually matter

1. Compliance tracking with deadlines

The single most valuable feature for a small charity is automated deadline tracking. Your annual return, policy reviews, DBS renewals, Gift Aid submissions, and governance code self-assessment all have different cycles and deadlines. Software that tracks these and sends reminders prevents the most common compliance failures.

What to check: Does the tool know about charity-specific deadlines (annual return = 10 months after year end, DBS renewal = every 3 years)? Or is it a generic task manager that you have to configure yourself?

2. Policy version control

If your safeguarding policy lives in a Word document on someone's laptop, you have a governance problem. Look for:

• Central storage with clear version history
• Review date tracking (when was each policy last reviewed?)
• Approval workflows (who approved this version?)
• The ability to see what changed between versions

You do not need enterprise document management. You need to answer "where is our current safeguarding policy and when was it last reviewed?" in under 30 seconds.

3. Trustee and volunteer records

Charity trustees change. Volunteers come and go. You need a single place to track:

• Current and past trustees (names, dates of appointment and departure)
• DBS check status and renewal dates for everyone who needs one
• Contact details
• Which committees or roles each person holds

What to avoid: CRM-style contact databases designed for donor management. You need an operational register, not a marketing tool.

4. Gift Aid management

If your charity claims Gift Aid, you need to manage donor declarations and batch claims to HMRC. Look for tools that:

• Store Gift Aid declarations with the required donor details (name, address, taxpayer confirmation)
• Flag when declarations may be invalid (e.g., donor no longer a UK taxpayer)
• Generate claim summaries compatible with HMRC's Charities Online service

Most small charities batch Gift Aid claims quarterly or annually. The tool should make it easy to pull together a claim for a specific period.

5. Reporting for your annual return

When your annual return is due, you need to pull together specific information quickly. Good software lets you generate a summary of your compliance position — policies reviewed, trustees confirmed, incidents reported — without manually checking each item.

What you probably don't need

Donor CRM — Unless your charity has a significant individual giving programme, a full donor CRM is overkill. If you do need one, that is a separate purchase from your compliance tool.

Fundraising tools — Event ticketing, online donation pages, campaign management. Important for fundraising charities, but irrelevant for a village hall trust or a PTA.

Enterprise governance suites — Board portals, risk management frameworks, audit trail software. These are designed for charities with paid governance staff and budgets above £500k/year. If the pricing is "contact us for a quote," it is probably not built for your charity.

Mobile apps — Nice to have, but a responsive web interface is sufficient for quarterly trustee meetings and annual compliance tasks.

How to evaluate pricing

Small charity budgets are tight. When evaluating pricing:

Watch for per-user pricing. Charity trustees are volunteers who log in a few times a year. Paying £10-20/month per trustee for occasional access is poor value. Look for tools that charge per charity or per tier, not per seat.

Check what's included in free tiers. Some tools offer free access for the smallest charities. If your income is under £10,000, you may find a free plan that covers your needs. But check what is locked behind the paywall — often the compliance features (reminders, reporting) are premium only.

Factor in the cost of NOT having software. If your treasurer spends 4 hours preparing the annual return because they are hunting through emails for trustee details, and the tool costs £20/month, the tool pays for itself in avoided stress and time — even on a volunteer's schedule.

Questions to ask before buying

1. Is it built for charity compliance, or adapted from something else? Generic project management tools can track tasks, but they do not understand charity-specific obligations.

2. Can my trustees access it without training? Volunteer trustees will not attend a software training session. If the interface is not immediately understandable, it will not get used.

3. Does it handle the data we need to store securely? Trustee personal details, DBS check results, and donor information are all sensitive. Check that the tool has appropriate security and meets UK GDPR requirements.

4. What happens to our data if we stop paying? Can you export everything? How long do they retain your data? This matters more for charities than for typical SaaS customers — your compliance records may need to be kept for years.

5. Is the pricing sustainable for a charity our size? A £20/month tool is £240/year. For a charity with £30,000 income, that is nearly 1% of revenue. Make sure the value justifies the cost.

A note on spreadsheets

Spreadsheets are not inherently bad. For a small charity with 5 trustees and a straightforward compliance picture, a well-maintained spreadsheet can work — provided someone owns it, backs it up, and keeps it current.

Spreadsheets break down when:

• Multiple people need to update the same document
• You need reminders for upcoming deadlines
• You cannot find the latest version of a policy
• A trustee leaves and takes their laptop (and the spreadsheet) with them

If any of these apply, dedicated software is worth considering.

For a broader view of your compliance obligations, see our charity compliance checklist. You can also try our free Governance Code Self-Assessment to see how an interactive compliance tool works in practice.

This guide applies to charities registered in England and Wales. This is general guidance — evaluate any software against your charity's specific needs and budget.

Sources

• Prepare a charity annual return — GOV.UK
• Charity Governance Code 2025
• Claim Gift Aid — GOV.UK

This guide walks through what to prepare, step by step, based on your charity's income level.

Before you start: know your deadlines

Your annual return deadline is 10 months after your financial year end. Common examples:

You submit through your My Charity Commission Account. Each trustee who needs to submit must have their own login — you cannot share credentials.

Step 1: Confirm your charity's income band

The information you need depends on your income:

Under £10,000 — Report income and spending figures only. No accounts or report required.

£10,000 to £25,000 — Answer questions about your charity's activities and finances. You do not need to upload accounts, but you should still prepare them for your own records.

Over £25,000 — Submit your trustees' annual report, accounts, and independent examiner's or auditor's report. You must also confirm there are no unreported serious incidents.

Audit thresholds: Currently, a statutory audit is required if gross income exceeds £1 million, or if gross assets exceed £3.26 million and income exceeds £250,000. From 1 October 2026, the audit threshold rises to £1.5 million and the independent examination threshold rises from £25,000 to £40,000.

Step 2: Prepare your accounts

Your accounts should be ready and approved by the trustees before you start the annual return. For charities under £500,000, receipts and payments accounts are acceptable. Larger charities must use accruals accounting.

Key figures you'll need:

• Total income for the year
• Total expenditure for the year
• Total funds carried forward (split by restricted and unrestricted if applicable)
• Value of assets (land, buildings, investments)

SORP 2026 note: If your accounting period starts on or after 1 January 2026, the new SORP applies. For charities under £500,000, the Tier 1 framework simplifies your reporting — check our SORP 2026 Tier Calculator to see what applies.

Step 3: Prepare your trustees' annual report

If your income is over £10,000, you need a trustees' annual report. At minimum, include:

• Charity name, registration number, and principal address
• Names of all trustees who served during the year
• Name and address of your bank
• Name and address of your independent examiner or auditor (if applicable)
• Your charity's objectives and principal activities
• How your charity has delivered public benefit
• A financial review — explain your financial position, reserves held, and reserves policy
• Plans for the next year

For charities under £500,000, this can be a concise document — a few pages covering the essentials. The Charity Commission publishes detailed guidance on what to include.

Step 4: Get your examination or audit done

If your income exceeds £25,000, your accounts must be independently examined. Above £1 million income (rising to £1.5 million from October 2026), you need a full audit.

Finding an independent examiner: For small charities, this does not have to be an accountant. Anyone with the "requisite ability and practical experience" can examine accounts under £250,000. Many local CVS organisations offer this service, sometimes free or at reduced cost for small charities.

Book your examiner well in advance — the months after 31 March (the most common charity year end) get busy.

Step 5: Update your trustee details

Before submitting, check that the Charity Commission's records match your current trustees. You can update trustee details through your My Charity Commission Account at any time — you do not need to wait for the annual return.

For each trustee, confirm:

• Full legal name
• Date of birth
• Date of appointment
• Whether they are still serving

If a trustee has resigned or been removed during the year, record the date they left.

Step 6: Check for serious incidents

The annual return asks whether your charity has had any serious incidents that should have been reported. These include:

• Fraud, theft, or significant financial loss
• Safeguarding concerns involving beneficiaries
• Links to terrorism or proscribed organisations
• Significant data breaches
• Suspicion that the charity has been a victim of crime

If an incident occurred and was not reported at the time, report it before submitting your annual return. Declaring "no incidents" when one occurred is a compliance failure that can trigger a Charity Commission inquiry.

Step 7: Submit your return

Log in to your My Charity Commission Account and follow the prompts. The questions are tailored to your charity's size and type — review the question guide beforehand so nothing catches you off guard.

Upload your documents: If required (income over £25,000), upload your trustees' annual report, accounts, and examiner's/auditor's report as PDFs. Make sure they are the final approved versions.

After submission: You will receive a confirmation. Your annual return data and accounts become publicly available on the Charity Commission's register.

Common mistakes to avoid

Late filing: Set a calendar reminder 2 months before your deadline to start preparation. The return itself takes 30-60 minutes once you have everything ready — it is the preparation that takes time.

Outdated trustee records: If you appointed or removed trustees mid-year, update the register before submitting. Discrepancies between your return and the register create unnecessary queries.

Forgetting to report serious incidents: The question is not whether the incident was resolved — it is whether it was reported to the Charity Commission at the time. If in doubt, report it now.

Mismatched figures: Your income and expenditure figures in the return must match your accounts exactly. Cross-check before submitting.

FAQ

How late can a charity file an annual return? There is no grace period. If you miss your deadline, the Charity Commission can mark your charity as "overdue" on the public register. Persistent late filing can lead to removal from the register entirely.

What happens if a charity doesn't file an annual return? The Charity Commission will send reminders. If you still don't file, your charity will be flagged as non-compliant on the public register. After extended non-filing, the Commission can remove your charity from the register, which affects your ability to claim Gift Aid, receive grants, and operate bank accounts.

Can I amend my annual return after submission? You cannot edit individual answers. You must contact the Charity Commission to request a full reset of your return, then resubmit. However, you can replace uploaded documents (accounts, reports) without a reset.

This guide applies to charities registered with the Charity Commission for England and Wales. Scottish charities report to OSCR; Northern Irish charities to CCNI. This is general guidance, not legal advice.

Sources

• Prepare a charity annual return — GOV.UK
• Prepare a charity trustees' annual report — GOV.UK
• How to report a serious incident — GOV.UK
• Charity annual return question guide — GOV.UK

This checklist covers every compliance obligation a small charity registered in England and Wales needs to manage in 2026, with specific deadlines, thresholds, and links to official guidance.

1. Annual return to the Charity Commission

Every registered charity must submit an annual return within 10 months of its financial year end. If your year ends 31 March, your deadline is 31 January the following year.

What you need to prepare depends on your income:

Under £10,000: Report income and spending figures only.

£10,000 to £25,000: Answer questions about your charity's activities and finances. No separate accounts submission required.

Over £25,000: Submit your trustees' annual report, accounts, and independent examiner's or auditor's report alongside the return. You must also declare there are no unreported serious incidents.

Audit thresholds (changing October 2026): A statutory audit is currently required if gross income exceeds £1 million, or if gross assets exceed £3.26 million and income exceeds £250,000. From 1 October 2026, the audit threshold rises to £1.5 million income, and the independent examination threshold rises from £25,000 to £40,000.

Submit through your My Charity Commission Account. Review the question guide before you start so you know what information you'll need.

For a step-by-step walkthrough, see our annual return preparation guide.

2. Trustees' annual report

If your charity's income exceeds £10,000, you must prepare a trustees' annual report alongside your accounts. The report covers:

• Your charity's name, registration number, address, and trustee names
• Objectives and activities during the year
• How your charity has delivered public benefit
• A financial review, including your reserves policy
• Plans for the next reporting period

Charities under £500,000 income can use a simplified report format. SORP 2026 introduces a new Tier 1 framework that reduces reporting complexity for smaller charities — see section 7 below.

Charities over £500,000 follow the full SORP format, including detailed strategy, risk assessment, and achievement reporting.

The Charity Commission publishes detailed guidance on preparing your trustees' annual report.

3. Charity Governance Code 2025 self-assessment

The Charity Governance Code was refreshed in November 2025 with eight principles:

1. Foundation — your governing document, legal form, and charitable purposes
2. Organisational Purpose — clear mission, strategy, and plans
3. Leadership — effective board leadership and chair role
4. Ethics and Culture — values, behaviours, and organisational culture
5. Decision Making — informed, transparent, and documented decisions
6. Managing Resources and Risks — financial oversight and risk management
7. Equity, Diversity and Inclusion — board diversity and inclusive practices
8. Board Effectiveness — skills, development, and performance review

The Code uses an "apply or explain" approach: your board assesses itself against each principle and either demonstrates how it applies the principle or explains why it has taken a different approach. This is not a pass/fail exercise — it helps boards identify areas for improvement.

New in 2025: The Code now recommends charities establish a policy for the use of technology and AI tools. Equity, diversity, and inclusion has been elevated to a standalone principle.

The Code applies to all registered charities regardless of size, though smaller charities will naturally apply some principles differently.

Use our free Governance Code Self-Assessment tool to work through each principle with your board. For a detailed breakdown of the 2025 changes, read our Charity Governance Code 2025 guide.

4. Required policies

There is no single statutory list of "mandatory policies" for charities, but the Charity Commission, the Governance Code, and sector regulators expect charities to maintain several core policies. Missing these can trigger regulatory inquiries.

Policies every charity should have:

Safeguarding policy — Required if you work with children or vulnerable adults. Cover recruitment checks (DBS), behaviour codes, reporting procedures, and a designated safeguarding lead. Even charities without direct beneficiary contact should have a basic safeguarding statement.

Data protection (GDPR) policy — The UK GDPR and Data Protection Act 2018 apply to all charities that process personal data, regardless of size. Your policy should cover lawful bases for processing, data retention periods, subject access requests, and breach notification procedures.

Complaints procedure — The Charity Commission expects all charities to have a formal complaints process with clear timeframes for acknowledgement, investigation, and resolution.

Reserves policy — Explains how much unrestricted money your charity holds and why. Trustees should agree a target range and review it annually. The Charity Commission frequently queries charities with high reserves and no clear policy.

Financial controls policy — Covers authorisation levels, segregation of duties, bank account management, and expense claims. Essential for preventing fraud and meeting trustee duties under the Charities Act 2011.

Conflict of interest policy — Trustees must declare and manage conflicts of interest. Your policy should cover how conflicts are identified, recorded in the minutes, and managed during board decisions.

Additional policies to consider: volunteer management policy, health and safety policy, equality and diversity policy, fundraising policy, risk management framework, and a trustee code of conduct.

Check which policies your charity needs with our free Compliance Checklist Generator.

5. Gift Aid claims to HMRC

Gift Aid lets your charity claim 25p for every £1 donated by UK taxpayers. To claim:

• Register with HMRC for Gift Aid (separate from your Charity Commission registration)
• Hold a valid Gift Aid declaration from each donor — this must include the donor's full name, home address, and confirmation they are a UK taxpayer
• Submit claims through HMRC's Charities Online service

Claims can cover donations received in the last 4 years, so there is no need to claim in real time. Most small charities batch claims quarterly or annually alongside their annual return preparation.

Common pitfalls: Invalid declarations (missing donor details or undated forms), claiming on donations where the donor has not paid enough income or capital gains tax to cover the Gift Aid amount, and failing to keep adequate records. HMRC can — and does — claw back Gift Aid claimed incorrectly.

6. DBS checks for trustees and volunteers

Whether your charity needs DBS checks depends on your activities:

Working with children or vulnerable adults: Enhanced DBS checks are required for trustees and volunteers in regulated activity. Standard checks may be sufficient for supervised roles. Check the DBS eligibility guidance to confirm which level applies.

Not working with these groups: Basic DBS checks may still be appropriate for trustees handling finances or sensitive personal data.

DBS checks for volunteers are free. Checks do not have a formal expiry date, but the Charity Commission recommends renewal every 3 years as good practice. With multiple volunteers, tracking who needs renewal and when is one of the most common compliance gaps flagged in charity governance reviews.

7. SORP 2026 reporting changes

The Statement of Recommended Practice (SORP) 2026 was published on 31 October 2025 and applies to accounting periods starting on or after 1 January 2026. The biggest change is a new three-tier reporting system:

• Tier 1 (under £500,000 income): Simplified reporting — covers the majority of small UK charities
• Tier 2 (£500,000 to £1 million): Intermediate reporting requirements
• Tier 3 (over £1 million): Full SORP reporting

Key changes for small charities:

• Proportionate reporting on reserves, risks, and strategy
• New requirements for environmental, social, and governance (ESG) disclosure, scaled to charity size
• Changes to how charities account for leases and revenue recognition

Threshold changes from October 2026: The statutory audit threshold rises from £1 million to £1.5 million income. The independent examination threshold rises from £25,000 to £40,000 income. If your charity currently sits near these thresholds, check whether the new levels change your reporting obligations.

Use our free SORP 2026 Tier Calculator to check which tier applies to your charity.

Your compliance calendar

Here is when to schedule each obligation across your financial year:

Throughout the year:

• Record Gift Aid declarations for each donation
• Log DBS check dates and schedule renewals
• Document trustee meeting minutes and decisions

After year end (within 10 months):

• Prepare accounts and trustees' annual report
• Submit annual return to the Charity Commission
• Submit Gift Aid claims to HMRC

Annually:

• Review all core policies (safeguarding, GDPR, complaints, reserves, financial controls, conflict of interest)
• Conduct Governance Code self-assessment with your board
• Review and update your risk register

Every 3 years (good practice):

• Renew DBS checks for trustees and volunteers (DBS checks do not formally expire, but periodic renewal is widely recommended)
• Review your governing document and consider updates

This guide applies to charities registered with the Charity Commission for England and Wales. Regulations differ in Scotland (OSCR) and Northern Ireland (CCNI). This is general guidance, not legal advice — consult a solicitor or your independent examiner for advice specific to your charity.

Sources

• Prepare a charity annual return — GOV.UK
• Prepare a charity trustees' annual report — GOV.UK
• Charity Governance Code 2025
• Claim Gift Aid — GOV.UK
• DBS eligibility guidance — GOV.UK