The Amendment Regulations making this change were laid before the Scottish Parliament on Monday 10 November. ICAS (Institute of Chartered Accountants of Scotland) has long campaigned for a threshold increase.

“This is a significant and positive step for Scottish charities,” said Christine Scott, head of charities and reporting at ICAS. “Many charities will benefit from this deregulatory measure, which recognises the impact of inflation and reverses years of gradual regulatory creep. It will allow charities benefitting from this increase to re-focus saved resources on other priorities.”

Alongside the increase in the audit threshold, the regulations also raise the threshold for the preparation of consolidated group accounts from income of £500,000 to £1m per year.

“This second deregulatory measure will be an additional bonus for some charity-led groups. Both threshold changes sensibly apply from the same date as the new Charities Statement of Recommended Practice (SORP) 2026,” Scott added.

ICAS had advocated for an approach that would allow a one-year grace period for charities breaching the audit threshold in a single year, bringing practice for Scottish charities closer to the structure of the company audit threshold, albeit that the company threshold itself is understandably higher given the additional accountability the public expects of charities.

Ms Scott continued: “For charities that receive a one-off grant or legacy pushing them temporarily over the audit threshold, the cost and effort of a one-off audit may outweigh the related benefit.”

The Amendment Regulations also provide charities with the ability to apply to OSCR for dispensation from disclosing information in trustees’ annual reports and accounts if disclosure could compromise the safety or security of staff, beneficiaries, or property. These measures arise from the Charities (Regulation and Administration) (Scotland) Act 2023.

“While these are welcome developments, charitable companies must remain mindful that they are still required to disclose all information mandated under UK company law for such entities,” said Ms Scott.