Charity sector developments to watch in 2026

2026 is shaping up to be a year of significant change for the charity sector. From sweeping employment law reforms to new accounting standards and security obligations, charities of all sizes will need to be aware of several legal and regulatory developments.

This article provides a brief overview of what’s on the horizon and what it may mean for your organisation.

The Employment Rights Act 2025

The Employment Rights Act 2025 (ERA) received Royal Assent on 18 December 2025 and has been described as the biggest overhaul of UK employment law in a generation.

Its reforms will be implemented in phases across 2026 and 2027, so charities that employ staff will need to prepare accordingly.

Among the headline changes taking effect in April 2026 are:

• Strengthening of statutory sick pay (SSP) – removing both the lower earnings limit and the waiting period, so SSP is payable from day one of absence
• The introduction of day one rights to paternity leave and unpaid parental leave
• Establishment of the Fair Work Agency, a new single enforcement body for workplace rights.

From October 2026, employers will be subject to:

• A strengthened duty to take ‘all reasonable steps’ to prevent sexual harassment, including by third parties such as service users or donors
• A new obligation to inform workers of their right to join a trade union
• Employment tribunal time limits will increase from three to six months.

Looking further ahead to January 2027:

• The qualifying period for unfair dismissal will reduce from two years to six months, and the statutory cap for unfair dismissal awards will be removed entirely
• The practice of dismissal and re-engagement, often referred to as ‘fire and re-hire’, will automatically be unfair dismissal, except in cases of severe financial distress
• Workers engaged on zero-hours (or low-hours) contracts will have rights to guaranteed hours and compensation for shifts cancelled or changed at short notice.

These are only some of the key provisions of the ERA. There’s considerably more detail to come through secondary legislation and consultations, but charities should begin reviewing their employment contracts, policies and procedures now to ensure they’re ready as each tranche of reforms takes effect.

Charities Statement of Recommended Practice 2026

The new Charities Statement of Recommended Practice (SORP 2026) was published on 31 October 2025 and applies to accounting periods beginning on or after 1 January 2026. Although the core legal obligations remain largely unchanged, it places greater emphasis on narrative reporting in the trustees’ annual report, including on impact, reserves and, for larger charities, sustainability.

The update does, however, introduce a number of changes that will affect how charities prepare their accounts.

Among the key changes is the introduction of a three-tier reporting framework based on gross income, which is intended to make reporting requirements more proportionate to the size of the charity.

SORP 2026 also introduces further changes to align with the revised Financial Reporting Standard 102.

Separately, the Department for Culture, Media and Sport has announced increases to certain financial thresholds for charities in England and Wales, which are expected to take effect from 1 October 2026. These include raising the audit threshold from £1m to £1.5m in gross income.

The accounting and tax implications of these changes will vary from charity to charity. We recommend speaking to your auditors or accountants for specialist advice on how the new SORP will affect your organisation.

Martyn’s Law

The Terrorism (Protection of Premises) Act 2025, commonly known as Martyn’s Law, received Royal Assent on 3 April 2025. Named in memory of Martyn Hett, who was among the 22 people killed in the Manchester Arena attack in 2017, the Act introduces new statutory duties on those responsible for certain premises and events to plan for and mitigate the risk of terrorism.

The Act adopts a tiered approach:

• Standard tier requirements will apply to premises where it’s reasonable to expect between 200 and 799 individuals to be present at any one time (including staff)
• Enhanced tier requirements apply where 800 or more individuals may be present, or to other qualifying public events of that scale.

Standard tier obligations centre on having public protection procedures in place for evacuation, invacuation, lockdown and communication, and are intended to be simple and low-cost. Enhanced tier premises and events must additionally implement public protection measures to reduce vulnerability.

Charities that operate public-facing venues, community halls, places of worship or host large events should consider whether they fall within scope. Notably, places of worship are subject only to the standard tier requirements, even where their capacity exceeds 800.

Although the government intends an implementation period of at least 24 months before the Act comes into force, charities should begin familiarising themselves with the requirements and review their existing security arrangements.

Looking ahead

The combined effect of these developments means that 2026 will be a busy year for charity trustees and their advisers. Whether it’s updating employment contracts and HR policies, preparing for a new accounting framework or reviewing security procedures, early preparation will be key.