Chartered Accountants Ireland has partnered with Goodbody to publish the Investment Tax Guide 2026, which can be used as an ongoing reference to help consider the tax implications of specific investments.   Chartered Accountants Ireland and Goodbody launched the guide and hosted a webinar examining the landscape of investment taxation in Ireland. The panel discussion, moderated by Grant Sweetnam, Head of Public Policy at Chartered Accountants Ireland, featured Cróna Clohisey, Director of Members and Advocacy at Chartered Accountants Ireland, and Catriona Coady, Head of Tax at Goodbody, as panellists.  Over the hour, the panel unpacked a range of developments shaping the 2026 investment landscape. They explored the Government’s renewed focus on encouraging retail investment, including the commitments arising from the Funds Sector Review and the anticipated roadmap for simplifying Ireland’s complex retail investment tax framework. Cróna outlined how proposals such as removing the 8‑year deemed disposal rule on funds could support long‑term savers, while Catriona highlighted the implications of tax changes already announced for 2026 and how investors can navigate the current regime.  The panel also emphasised the critical role of financial literacy among adults, stressing that enhancing public understanding of investment and retirement planning must be a renewed government priority. This is particularly pressing as Ireland confronts the dual challenges of an ageing population and a shrinking workforce, which could threaten the sustainability of state pension payments in the years ahead.  The conversation also examined the EU’s Savings and Investment Union and what upcoming initiatives may mean for Irish households. With Ireland set to assume the EU Council Presidency later this year, the panel noted the opportunity to influence reforms that better align Ireland with its European peers.  You can read the guide here. .

From the Professional Accountancy team…... In January 2026 ,Chartered Accountants Ireland hosted an online webinar with the Central Bank of Ireland ,the Irish Revenue Commissioners  and the EU Sanctions Helpdesk on  the essentials of EU sanctions compliance, the support available to Irish businesses, and how the EU Sanctions Helpdesk assists SMEs. Content included some  real-world case studies and  a questions and answers session  with the panel.   This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.    

Chartered Accountants Ireland and Goodbody invite you to a live webinar on Thursday, 5 February at 11am, where we will explore everything you need to know about investment taxes in Ireland in 2026. Cróna Clohisey, Director of Members and Advocacy at Chartered Accountants Ireland and Catriona Coady, Head of Tax at Goodbody, will share their insights on the evolving tax landscape. Moderated by Grant Sweetnam, Head of Public Policy at Chartered Accountants Ireland, the discussion will cover: Government initiatives to boost retail investment participation The EC Savings and Investment Union Key tax changes impacting Irish investments in 2026 Tax implications by investment vehicle Strategic approaches for investor portfolios There will be an opportunity for a Q&A with our expert panel at the end of the session. ‘Register today’ button: https://goodbody.zoom.us/webinar/register/WN_lqTsnMp9QHK2ldAbPNPwww#/registration

Comments by the Institute’s Head of Tax, Gearóid O’Sullivan, were included in an Irish Times article on proposed interest tax reforms.

The latest version of the annual average exchange rates has been updated to include the average market mid-closing rate of various currencies against the Euro for 2025.

The CESOP registration guidelines and guidance has been updated by Revenue to reflect the new agent and advisor e-linking application process and to include information on the procedure for de-registering from CESOP.

Revenue has created a new guidance document on the framework, scope, and objectives of the International Cooperation and Capacity Building (ICCD) unit that manages International Cooperation and Technical Assistance and Capacity Building (TACB) requests in Revenue.

Revenue has updated its guidance on the main purpose tests to explain the application of the 'reasonable to consider' test and to clarify how the objective tests should apply.  The guidance outlines that the essence of the ‘reasonable to consider’ test is to assess whether the taxpayer has genuinely considered the tax consequences of a transaction in the same manner as a reasonable taxpayer would do so. The objective ‘main purpose’ test applies to disclosures of a transaction under the mandatory disclosure regime and when assessing a transaction in light of the anti-avoidance provisions under section 811C TCA 1997. When applying a main purpose test, the guidelines outline that it is first necessary to determine if it is objective (what a reasonable man on the street would think) or subjective (what did the taxpayer actually have in mind).  

Revenue has updated its guidance on Residential Zoned Land Tax (RZLT) to reflect the amendments provided for in Finance Act 2025. The main changes relate to the new provisions where landowners request rezoning of land, the exemption where landowners are precluded from developing land, and certain provisions relating to the due date for payment of liabilities in situations where liabilities arise after death.

Revenue has updated its guidance on the exemptions for certain profits specifically those arising from production, maintenance and repair of certain musical instruments and from the microgeneration of electricity by an individual at his or her sole or main residence to reflect an extension of these reliefs to 31 December 2028, as provided for by Finance Act 2025. The guidance on accelerated capital allowances for slurry storage facilities has also been updated to reflect the extension of the scheme to 31 December 2029.

Revenue has issued updated guidance on the taxation of unit trusts for pension schemes and charities – Exempt Unit Trusts (EUTs) to reflect a change introduced by Finance Act 2025. The change clarifies that, for the purposes of section 731(5) TCA 1997, an investment undertaking cannot treat a gain on selling units in an exempt unit trust as fully exempt from capital gains tax.

Revenue has updated the agents guide to the Collector General’s division to include new guidance relating to the Vacant Homes Tax and to provide information on the calculation of a Local Property Tax charge based on the property’s valuation as of 1 November 2025. Paragraph 15 of the guidance has been updated to reflect the requirements under Companies Act 2014 in respect of company addresses. This paragraph also includes instructions for updating addresses on ROS and confirms that all requests for a change of address must be submitted through ROS for information security purposes.

Last week Revenue published statistics relating to 2025 PAYE tax returns filed to date this year on the back of which PAYE taxpayers are being encouraged to use the myAccount service to finalise their tax position. The statistics showed that as at 23 January 2026, over 470,000 PAYE returns had been processed for 2025 which resulted in refunds of over €361 million to PAYE taxpayers. An analysis of Preliminary End of Year Statements indicates that an underpayment of tax arose in approximately 9 percent of the returns yet to be filed. Revenue will engage with the relevant taxpayers to collect the tax due by reducing tax credits over a four-year period from 2027. Revenue has reported they estimate a further €462 million of tax may have been overpaid by PAYE taxpayers in 2025. In light of this, Revenue has launched a campaign to encourage PAYE taxpayers to use the myAccount service to finalise their tax position. Revenue has provided details on how to access this service and detailed guidance on submitting a PAYE tax return and claiming tax credits and reliefs.  

Revenue has issued a press release acknowledging the difficulties the recent exceptional weather may have caused for timely tax compliance.  They have also stated that they will work with adversely impacted taxpayers and businesses to help maintain their good compliance records despite the disruption. The press release outlines the strong record that Revenue has of agreeing flexible payment arrangements for taxpayers and businesses facing temporary cash‑flow pressures. It also advises those impacted by Storm Chandra to contact the Collector-General’s office once their situation permits, to agree mutually agreeable arrangements for restoring timely tax compliance.  

The Institute has written to Tánaiste and Minister for Finance, Simon Harris and Minister for Enterprise, Tourism and Employment, Peter Burke to outline the administrative burdens arising from tax issues affecting cross-border and remote/hybrid working on the island of Ireland. The issues outlined in the letters reflect the outputs from the Institute’s Joint Tax Working Subgroup on Cross‑Border and Remote/Hybrid Working, established in 2024 and highlight the key obstacles and challenges currently hindering trade and the full realisation of a truly integrated all-island labour market. Amongst the issues raised were: The added administrative responsibilities for both employers and employees of operating a dual payroll. The administration burden and complexities arising when the social welfare obligations and benefits arise under a different jurisdiction than the country of employment. The uncertainty on the tax treatment of pension contributions and retirement income in the context of hybrid working arrangements for frontier workers. The need for education, training and better guidance from government bodies and the tax authorities. We will continue to advocate on this issue and welcome the opportunity to meet with the Ministers to present our findings in greater detail and to discuss potential solutions. We also intend raising these issues with the Irish Minister’s counterparts in Northern Ireland in the coming days.

In this week’s cross-border trading corner, we bring you the latest guidance updates and publications. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. In December last year, the European Commission announced a reinforcement of controls on products imported into the EU which you can read more about below. And last week in the House of Lords, Lord Newby moved a ‘Motion to take Note’ on the case for a UK-EU customs union and the impact of connections with the EU single market on the UK economy which was then debated in the House.   Update on reinforcement of controls on products imported into the EU In December the European Commission announced a reinforcement of controls on products imported into the EU. Within the measures listed, was an increase in the frequency of checks on consignments of goods of animal origin entering the EU. The Commission wrote to DEFRA stating that the frequency rates will now be updated every four months; previously this was reviewed every six months. The last series of rate changes was made on 1 October 2025, and the Commission has launched the next series of rate changes which took effect from 1 February 2026. More details are available in an email from the UK Government’s Borders Directorate Communications Team. Miscellaneous guidance updates and publications This week’s miscellaneous guidance updates and publications are as follows: Designated export place (DEP) codes for Data Element 5/23 of the Customs Declaration Service, Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service, External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service, Find out what types of Authorised Economic Operator status you can apply for, Apply to operate a customs warehouse, How to use a customs warehouse, Importing sanitary and phytosanitary controlled goods into Great Britain that interact with the Border Trade Matching Service, and Simplified rates for bringing personal goods into the UK.  

In this week’s detailed updates which you can read more about below, the House of Lords Finance Bill Sub-Committee has published its report into the Finance Bill 2025/26 and the Government recently announced that indirect emissions associated with the production of Carbon Border Adjustment Mechanism (CBAM) goods will not be included in the scope of the UK CBAM at implementation on 1 January 2027. In other news this week: The Courts and Tribunals Judiciary has published a Practice Statement which gives guidance to the First Tier Tribunal Tax and Chancery Chamber on the procedure to adopt towards applications for extension of time, The House of Commons Library has published a research briefing ‘Income tax: freezing the personal allowance and the higher rate threshold’ and an updated briefing on the Autumn Budget and the Finance Bill 2025/26, and HMRC’s Guideline for Compliance (GfC) team has updated GfC7 ‘Help with Common Risks in Transfer pricing Approaches.’  Finance Bill Sub-Committee publishes report on Finance Bill 2025/26 The House of Lords Finance Bill Sub-Committee has published its report into the Finance Bill 2025/26 ‘Inheritance tax measures: unused pension funds and agricultural and business property reliefs’. Last October, the Institute submitted evidence to Committee as part of its inquiry into the Bill which set out our concerns in relation to the original draft legislation on the changes to the Inheritance Tax (IHT) reliefs agricultural property relief and business property relief and its impact on farms and family owned businesses in Northern Ireland. Subsequently, the Institute’s UK Tax Manager Leontia Doran gave evidence to the Committee last October. The report from the Committee welcomes the subsequent changes announced by the UK Government in both the Autumn Budget 2025 and on 23 December 2025 to the draft legislation. However, it highlights that the changes are not by themselves sufficient to resolve many of the Committee’s concerns about what the reforms will mean in practice. The Committee also highlighted how continued revision of these measures reflects underlying problems with the Government’s approach to tax policy making, in particular in relation to its approach to consultation. The report also sets out a range of recommendations in relation to both policy changes, many of which reflect recommendations previously made by the Institute. Update on UK CBAM Finance Bill 2025/26 includes the final CBAM primary legislation which contains a number of technical legislation changes including that indirect emissions associated with the production of CBAM goods will not be included in the scope of the UK CBAM at its implementation on 1 January 2027. This has been delayed until 2029 at the earliest which, according to an email from HMRC, reflects ‘continued support for the Energy Intensive Industries (EII) Compensation Scheme’.  HMRC has also published a CBAM Policy Update. Recognising that refineries play a role in energy security and the UK's industrial base, a Call for Evidence will be published at some point this year on the fuel sector. The Government is also considering the feasibility and impact of including refined products in the scope of the CBAM in the future.   A number of technical changes have also been made to the draft CBAM legislation following a consultation last April, the consultation outcome for which has now been published. These changes include:     the free allowance adjustment in the CBAM rate calculation will be based on a sectoral average of emissions covered by Free Allowances over a baseline period, which will be adjusted annually to reflect the phase out of Free Allowances under the UK Emissions Trading Scheme,  carbon price relief has been extended to enable recognition of carbon prices incurred under carbon border adjustment mechanisms, inclusion of an exemption for emissions embodied in UK-produced precursor goods, imported into the UK as part of a complex CBAM good. This aims to prevent a carbon price being paid twice on the same goods, and also aims to reduce the administrative burdens for businesses,  inclusion of an exemption for emissions embodied in CBAM goods under temporary admission in the UK, with full relief from customs duties which aims to ensure the CBAM only applies if goods enter the UK market and present a carbon leakage risk,  a time limit for repayment claims set at three years for taxpayers who have made an error on their return and overpaid the CBAM, and removal of the group treatment provision following feedback that this would provide limited benefits to businesses.    Anyone wishing to keep up to date with policy developments in this space should contact cbampolicyteam@hmrc.gov.uk. 

The 2025 Autumn Budget launched a Call for Evidence on tax supports for entrepreneurs to which the Institute is formulating a response. This is focusing on how UK tax policy can better support investment in innovative high growth companies. We’d like to hear your views on this issue before Monday 16 February 2026. Contact us by email to participate. In the Call for Evidence which is open until 28 February 2026, the Government’s view is that a shortfall in domestic scale-up capital is causing some of the UK’s most innovative companies and founders to move abroad. To address the issue, views are sought on: how effective existing tax supports are, any gaps in the tax system for founders and scaling companies, and options and ideas to improve, rebalance, and better target current supports that would allow the Government to fill these gaps where needed.  A number of changes were made to several of the UK’s tax advantaged venture capital schemes in the 2025 Autumn Budget which aim to enable larger and more established companies to continue to qualify to use the schemes. However, the Call for Evidence notes that these changes “take the existing schemes as far as possible within their current design”. As a result, the government is keen to consider how it could provide more targeted and effective support which also represents good value for money for the taxpayer. 

Making Tax Digital (MTD) for income tax commences in just over two months’ time from 6 April 2026 for sole traders and landlords with gross ‘qualifying income’ (combined income from trading and property before any deductible expenses) above £50,000. Are you ready for this change in UK tax administration? If not, now is the time to prepare. To assist you in your preparations, the Institute recently launched its MTD hub, a one stop shop of resources developed by the Institute to assist members and taxpayers in their preparations. The hub also contains the latest news and links to HMRC resources and guidance. You can also watch our video on the MTD hub here. Yesterday HMRC wrote to the Institute reiterating the importance of taking steps to prepare now ahead of the first tranche of mandation. It also asked us to share links to some important HMRC resources: MTD agent step by step guide, Register for specialist MTD support – these sessions provide agents with direct access to HMRC specialists that can provide tailored MTD readiness agent support, HMRC communications resources – these resources can be used to align your practice’s MTD messaging with what clients may see from HMRC and also provide ready-made products you can use to educate clients, and Sign up for a HMRC MTD webinar – these webinars cover planning steps, actions to take now, how to sign-up clients for April 2026 and answers to questions. The first webinar is scheduled for Wednesday 11 February 2026. Are you looking for the top tips on how to get ready? Check out HMRC’s new MTD agent toolkit. This aims to provide a practical aid to help guide agents through this journey in a logical order so that agents can be confident that they and their clients will be ready ahead of April 2026. The new toolkit includes help with understanding the changes, planning (including “segmenting clients”), preparing the practice (including the “service offer”), preparing clients (including a conversation checklist tool) and helpful resources including videos and webinars. Alongside this, the agent-specific content on HMRC’s MTD campaign page is also being updated to provide agents with a dedicated resource which will provide a clearer more streamlined journey and direct access to tailored guidance and resources. HMRC has also recently updated its guidance on the various MTD for income tax exemptions which are available as follows: Find out if you can get an exemption from Making Tax Digital for Income Tax – this page now contains the full list of exemptions from MTD for income tax, and Apply for an exemption from Making Tax Digital for Income Tax which explains the exemption applications process if a taxpayer is not automatically exempt. HMRC is keen to stress that as with all its MTD guidance, guidance will continue to be iterated ahead of April 2026 to ensure that policy and legislation are clearly reflected. As a result, we recommend that members bookmark these pages and regularly check for the latest updates which will also be covered in Chartered Accountants Tax news and on our MTD hub. For any taxpayers currently participating in MTD testing, HMRC is highlighting an issue with how payments on account (POAs) for 2025/26 and 2024/25 balancing payments of income tax and Class 4 NIC for self-assessment (SA) are treated. As the information for these taxpayers is split between different HMRC systems, any 2024/25 balancing SA payment remains within HMRC’s non-MTD system, whilst 2025/26 SA POAs are within the new MTD system. Because of this, some taxpayer statements show SA POAs as “transferred to digital” or “nil” and therefore do not show the full picture of any payments which were due on 31 January 2026. Taxpayers should access both the MTD service and the legacy SA service from within their Personal Tax Account (PTA) or Business Tax Account (BTA) to see the total balance which fell due. To address this, HMRC issued a letter explaining this issue to those affected which explained where to find their SA POAs information and how to work out what they still needed to pay. The letter also explained that POAs marked as “transferred to digital” were still due for payment by 31 January and what needed to be done if these did not appear in their MTD account. This is particularly important as interest will be charged on any amounts not paid by the 31 January 2026 due date. A message was also placed in the taxpayer’s MTD account advising them to check their SA online account. Agents should also ensure that they check both systems before advising clients. HMRC advises that work is already underway on longer term solutions for this issue for the future.

From the Professional Accounting Team In October 2025, the eagerly awaited 2026 version of the Charity Statement of Recommended Practice (2026 SORP) was published. This update follows the publication of the September 2024 version of FRS 102 and a SORP consultation in mid-2025, which attracted over 100 responses. The 2026 SORP contains some significant changes to how charities will report on their activities compared to the requirements of the 2019 SORP. This article looks at some of the key changes that charities who apply the SORP will need to be aware of as they begin their journey of reporting under the new SORP. Why was the SORP updated? As the SORP provides guidance on how charities can apply FRS 102, the SORP-making body must always ensure that it remains consistent with FRS 102. As a result, an amendment made to FRS 102 will prompt the need for similar amendments to be made to the SORP. Following the publication of the September 2024 edition of FRS 102, the SORP making body has set about updating the SORP to incorporate the various changes contained in the new edition of FRS 102. The Charity SORP 2026 represents the most significant overhaul of financial reporting for charities in Ireland and the UK for many years (and certainly the most significant change since the introduction of FRS 102). It will reshape how charities explain their activities, report on their impacts, recognise income, and account for leases. Changes made to the Charity SORP 2026 A New Tiered Reporting Structure The previous edition of the Charity SORP included the concept of a “larger charity” (charities with gross income exceeding £/€500,000). For those charities classed as “larger”, there were additional mandatory disclosure requirements compared to their “smaller charity” counterparts, particularly in relation to the disclosures in their Trustees Annual Report. Charity SORP 2026 builds on this concept and introduces a three-tier system, designed to further scale disclosure requirements according to charity size. Depending on the tier in which they fall, charities will have increased or decreased reporting requirements across five specific modules. The new tiers are as follows: Tier 1: Gross income up to £/€500,000 Tier 2: Gross income more than £/€500,000 but less than £/€15 million Tier 3: Gross income of more than £/€15 million This new system will result in some charities requiring more details in their Trustee’s Annual Report. These requirements are intended to be proportionate to the size of the charity. A Refocused Trustee’s Annual Report One of the most visible differences between a set of financial statements which have prepared solely under FRS 102 compared to the Charity SORP is the presence of a Trustee’s Annual Report in the SORP. The Trustee’s Annual Report is a key component of a charity’s Annual Report and aims to provide a narrative account of what has happened in the charity during the year. In the 2026 SORP, The Module dealing with the Trustee’s Annual Report (Module 1) has been rewritten to improve clarity, narrative quality, and alignment with financial information. One of the key goals of the SORP-making body in doing this is to help charity trustees to understand the narrative reporting requirements placed on them and to encourage trustees to link the narrative information to the financial details in the accounts. The emphasis of the Trustee’s Annual Report is firmly on impact reporting — communicating not just what a charity does, but also the difference it makes. Some specific changes relating to the Trustee’s Annual Report contained in the updated SORP include. Prompt questions to encourage charities to explain the impact that they are making. Within Module 1, there are now some “prompt questions” which should help charities to tell their story in a meaningful way. The purpose of this is to ensure that the charity does not see the module as simply a compliance checklist but rather a means by which they can explain the difference they are making in a way that is unique to their specific charity. The questions focus on areas such as, objectives, activities undertaken, strategy, measurement of success and wider societal benefits. Sustainability Reporting. In recognition of the fact that stakeholders are increasingly interested in how charities are responding to environmental, social and governance issues, the 2026 SORP introduces some mandatory and encouraged disclosures which address how the charity is responding to, and managing, these issues. Only charities in tier 3 (i.e. gross income exceeding €/£15 million) are required to explain this, with charities in tiers 1 and 2 having the option to do so. Legacy income. Where a charity is in receipt of legacy income and this income has been recognised in the accounts prior to the resources being received, the impact of this must be disclosed. Disclosure of auditors and exemption from disclosing certain information. Under the 2026 SORP there is now a specific requirement to provide the name of the charity’s auditors, if applicable. Furthermore, where certain disclosure exemptions are availed of (such as omitting the names of the CEO, senior staff members etc) due to a risk to their personal safety, there is no longer a requirement to explain why such information has been omitted from the Trustee’s Annual Report. Where a charity is availing of this option, they should be aware of the relevant local legislative requirements and should consult their regulator where necessary prior to availing of this exemption. Reserves and Going Concern Modules 1 and 3 include some changes in relation to reserves and going concern. The 2026 SORP introduces further clarity regarding the treatment of reserves. First, there is now a specific definition of reserves included in the glossary. Consideration of reserves is also better incorporated into going concern assessments and where a charity has no (or negative) reserves, there is now a requirement to explain why it is still operating as a going concern. Furthermore, there is now a recommendation for charities to consider their reserves and going concern assessment when explaining their plans for the future. In order to align with the FRS 102 Periodic Review amendments, there are some amendments to going concern disclosures, including a requirement to disclose significant going concern judgements as well as confirmation that the charity has considered at least 12 months of information in making its going concern assessment. Some going concern disclosures which were a “should” disclosure under the 2019 SORP are now a “must” disclosure. Revenue Recognition In order to align the SORP with the updates to FRS 102, Module 5 (“Recognition of income including contract income and income from legacies and grants”) has been updated and restructured. The updated Module provides clarity on how to account for the various income streams from which charities benefit. Module 5 has been split into 2 sections. Section 1: Exchange transactions Section 2: Non-exchange transactions Most charities will be in receipt of income from either (or both) types of transactions, and it is important to identify these appropriately, as the resulting accounting treatment is fundamentally different for each income stream. Exchange transactions For exchange transactions, charities will be required to apply the five-step model of revenue recognition whereby the transactions will go through the new model which has been derived from IFRS 15 Revenue from Contracts with Customers. The SORP includes guidance at each step of the process to help charities in applying the requirements. The five-steps of revenue recognition are: Step 1- identify the presence of a contract with a third party Step 2- identify the performance obligations in the contract Step 3- determine the transaction price Step 4- allocate the transaction price to the performance obligations in the contract Step 5- recognise income when or as a charity satisfies a performance obligation Charities who receive income from exchange transactions will need to bring these sources of income on the 5-step “journey” to determine the appropriate accounting treatment. In many cases, this will be a very straightforward exercise, with a clear path through each step. In some cases, charities will require a deeper consideration of each step. This might include, for example; A charity considering how many performance obligations exist in a contract with a customer and whether the series of goods/services are distinct. Consider a charity providing residential care services to individuals. If the contract with the customer includes additional goods and services beyond residential care services (such as meals, classes, medical sessions etc) then charities will need to consider the number of performance obligations in the contract and how these should be treated under step 2 of the model. Where a charity determines that it has multiple performance obligations in a contract, it must then allocate the transaction price to the performance obligations in the contract. This might involve estimation techniques if there are no observable standalone prices for that performance obligation. A charity will need to consider whether it satisfies its performance obligations over time or at a point in time as this will impact on the timing of revenue recognition. Non-exchange transactions For non-exchange transactions, charities are not required to apply the five-step model and instead must recognise income based on when performance-related conditions are met. Under the SORP, Non-exchange transactions that don’t impose future performance-related conditions on the recipient are recognised in income when the resources are received or receivable Non-exchange transactions that impose future performance-related conditions on the recipient are recognised in income only when the performance-related conditions are satisfied When resources are received or receivable before the performance-related conditions are satisfied, a liability is recognised While it is written more generally for an FRS 102 audience, and not specifically for charities, the FRC’s Factsheet 10 – Revenue from Contracts with Customers is a useful source of further reading on revenue recognition and the five-step model. Leasing Another significant change in the Periodic Review of FRS 102, which now makes its way into the Charity SORP, is in relation to lease accounting, and specifically lessee accounting. The updated SORP removes the operating vs finance lease distinction for lessee accounting and instead requires that most leases (with some exemptions) will be required to be recognised as a right-of-use asset on the balance sheet, with a related liability also recognised for future lease payments. A new Module 10B has been added to the SORP to address this. While much of the theory in relation to the new lease accounting rules is addressed in FRS 102, the SORP provides guidance and commentary on what this might mean for charities and deals with some circumstances that might be more prevalent in charities. Some specific circumstances addressed in the SORP include: Peppercorn leases whereby a charity has leased an asset for nil or for a nominal amount Social donation leases where the lease payments are below market rent Rolling leases with no specified end date The appropriate interest rate that a charity should use to determine the present value of lease payments Special conditions imposed on a lease because the tenant is a charity The new module 10B includes a useful flow chart which should help users to navigate the rules and signpost readers to where they can find further information. Not all assets leased by charities will be required to be recognised as right-of use assets and there are two prominent exemptions which (if applicable to the charity) will allow the charity to expense the lease in the year it is incurred. The two exemptions are; Low value leases. While not providing monetary guidance on what constitutes a “low-value” lease, the SORP sets out some asset types which would not typically be expected to be “low-value”. Furthermore, the SORP also highlights some assets which might be expected to be classed as "low-value”. Short-term leases. Leases which have a term of 12 months or less at the commencement date may avail of the option to not recognise a right-of-use asset in relation to the lease and instead can expense the lease payments on a straight-line basis over the lease term. A lease containing a purchase option cannot be treated as a short-term lease. Charities applying the SORP who lease assets will need to familiarise themselves with the new requirements and how they might impact on their assets, liabilities and profitability. Some challenges which may be encountered include: Information gathering- can the charity locate all of its leases? Determining the lease term- is there a legally enforceable lease in place? Has the charity a lease in place which has simply “rolled forward”. Leases where the charity is not paying full market value- How should a charity account for the “donation” element of this? Systems for recording leases- Does the charity have a system in place which can capture and record the relevant information for lease accounting or is a new system required? How to present value the lease liability at the beginning of the lease term. The FRC’s Factsheet 11 – Lease accounting for lessees is a useful source of further reading on the new lease accounting rules in FRS 102. Statement of Cash Flows Under the previous version of the SORP, a charity was required to prepare a statement of cash flows when it had income in excess of £/€500,000. The 2026 SORP increases this threshold to £/€15 million (ie. a Tier 3 charity). This change means that only the very largest charities will be required by the SORP to prepare a cash flow statement, and this change is broadly consistent with the requirements placed on companies of a similar size under FRS 102. In making the change the SORP making body noted that the change will have a positive impact on charities as it will reduce the reporting requirements for smaller charities. However, it is important to note that the increased threshold does not override any existing requirement that a charity might have to prepare a statement of cash flows. So, for example, a charity who operates as a company may have income below £/€15 million but may still be required by company law to prepare a statement of cash flows because it does not meet the definition of a small entity. The exemption is also voluntary and a charity who is in tier 1 or 2 may choose not to avail of this and prepare a statement of cash flows. Get ready for implementation The 2026 Charity SORP is effective for reporting periods beginning on or after 1 January 2026, leaving charities with limited time to prepare. Charities who apply the SORP should act now to familiarise themselves with the new requirements, assess the impact on their reporting processes, and plan any updates needed for a smooth transition. By acting early, charities can ensure they are ready to implement the revised SORP and meet their reporting obligations.   This information is provided for information only and nothing in this article purports to provide professional advice or definitive legal/technical interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the information. If the reader is in doubt on any matter in this complex area further advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of the information we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained herein.