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Paying a trustee's business a fair price is not the problem. Not disclosing it is.

By Buzz Accounting · 2026-09-16

The most common related party problem in a charity's accounts is not a trustee quietly enriching themselves. It is a genuinely proper transaction — a fair quote, a competitive price, a trustee who declared an interest and stepped out of the room — that nobody thought to write down, because everyone involved knew it was above board and assumed that was the end of the matter.

It isn't. Disclosure under the SORP has nothing to do with whether a transaction was fair. It is triggered by the relationship, not the price, and it applies whether the amount is £50 or £50,000.

Who counts as a related party

A related party is a charity's trustees, and their close family — spouse or civil partner, parents, children, siblings and grandchildren — together with any entity a trustee or their close family controls or has significant influence over. That last part catches more than most trustees expect: a trustee's limited company, a trustee's sole-trader business, a charity where the same person is a trustee of both, or a business run by a trustee's spouse are all related parties, even where the trustee has no day-to-day involvement in the transaction itself.

The disclosure is triggered by materiality of relationship, not materiality of value

Ordinary accounting treats a transaction as worth disclosing once it is large enough to matter to someone reading the accounts. Related party transactions are treated differently: the SORP regards them as material by their nature, regardless of size. A £120 print job bought from a trustee's business has to be disclosed on exactly the same basis as a £40,000 contract, because the point of the disclosure is the relationship, not the risk that the number is big enough to distort the accounts.

The six things SORP module 9 actually asks for

Where several transactions of the same type and with the same kind of related party occur, they can usually be totalled rather than listed one by one — but only where an individual transaction is not, on its own, significant enough that lumping it in would obscure its effect on the accounts. If there were no related party transactions at all in the year, that fact still has to be stated; silence on the point is not an acceptable substitute for saying "none."

Worked example: the printing invoice nobody wrote down

The figures below are illustrative. A charity's treasurer runs a small print business. Ahead of the charity's annual fundraising dinner, the trustees get three quotes for programmes and signage; the treasurer's company comes in cheapest, at £3,200, and the treasurer declares the interest and leaves the room for the decision. At the year end, £400 of that invoice is still unpaid.

What good practice looks like here. The decision itself was handled properly — competing quotes, declared interest, no involvement in the vote. What is still missing is the accounts note: the relationship (a trustee's company), the transaction and its amount (£3,200 for event print and signage), and the £400 balance outstanding at the year end. All three are required regardless of how fair the price was or how properly the decision was reached. A charity that handles the governance correctly but skips the note has done half the job.

Getting a fair price does not remove the need for legal authority

There is a separate question sitting underneath the disclosure one: whether the charity was allowed to pay a trustee's business in the first place. Charity trustees generally act as volunteers, and paying a trustee or a person connected to them for goods or services needs specific legal authority — an express power in the charity's governing document, Charity Commission consent, or the statutory route under section 185 of the Charities Act 2011, which allows a written agreement for a trustee to supply goods or services on specific conditions, with the trustee concerned withdrawing from the decision. Getting a fair quote and declaring the interest is good governance, but it does not, on its own, supply the legal authority the payment needs to exist at all. Check the authority before the transaction, not the disclosure after it.

What is not a related party transaction

A few things fall outside the definition and do not need this level of disclosure: an unconditional donation from a trustee, general voluntary services a trustee provides for free, a minor purchase a trustee makes from the charity on the same terms offered to the public, and expenses paid to a trustee acting purely as the charity's agent. Separately, and regardless of related party status, every charity — including ones on receipts and payments accounts, not just those on the full SORP — must disclose total trustee expenses reimbursed and the number of trustees involved, or state plainly that none were paid.

What to do this week

List every trustee and their close family, and note any business, employer or other charity each one controls or has significant influence over. That list is your related party register.
Check every supplier, contractor and grant recipient the charity has dealt with this year against that list.
For any match, confirm two separate things: was there legal authority for the charity to pay them at all, and has the transaction been written up with the relationship, amount, outstanding balance and terms.
If the answer to either is no, deal with the authority question first — a written trustee board minute recording the declared interest and the decision is the minimum, with formal Commission consent sought if the governing document does not already permit it.
If there genuinely were no related party transactions this year, make sure the accounts say so explicitly rather than being silent on the point.

None of this is about assuming trustees are up to something. Most related party transactions in charity accounts are exactly what this example is — a fair deal, properly decided, just not written up the way the SORP requires. Our guide to charity accounts and SORP covers where this note sits within the wider accounts, and our piece on trustee personal liability covers what happens when a related party transaction is done without the right authority in the first place.

Where we help

We build the related party register alongside your accounts, cross-check it against every supplier and grant recipient in the year, and make sure both halves are covered — the legal authority for the payment, and the disclosure the SORP requires once it has happened. Fixed fees from £39 + VAT a month. Get started.

Quick answers

About this post

What counts as a related party for a charity's accounts?

A charity's trustees, their close family — spouse or civil partner, parents, children, siblings and grandchildren — and any organisation that a trustee or a member of their close family controls or has significant influence over. This reaches further than most trustees expect: a trustee's own limited company, a sole-trader business run by a trustee's spouse, or another charity where the same person is also a trustee all count, even if the trustee concerned has no direct hand in the specific transaction being looked at.

Do we have to disclose a related party transaction even if we got a fair market price?

Yes. The SORP treats related party transactions as material because of the relationship, not because of the value or fairness of the deal, so getting three competitive quotes and paying a normal market rate does not remove the disclosure requirement. A fair price and a declared interest are good governance and worth having, but they answer a different question from the one the accounts note is there to answer, which is simply whether the relationship and the transaction happened at all.

What exactly has to go in the disclosure note?

Six things, set out in SORP module 9.23: a description of the relationship between the charity and the related party, a description of the transaction and its amount, any balance still outstanding with that party at the year end, any provision for doubtful debts or amounts written off, the terms and conditions including any security given, and any guarantees or commitments outstanding at the reporting date. Similar small transactions with the same type of related party can usually be totalled, but only where doing so does not obscure a transaction significant enough to need to stand alone.

Is it illegal for a charity to buy goods or services from a trustee's business?

Not automatically, but it needs specific legal authority before it happens, which is a separate requirement from the accounts disclosure afterwards. That authority can come from an express power in the charity's governing document, from Charity Commission consent, or from the statutory route in section 185 of the Charities Act 2011, which permits a written agreement for a trustee to supply goods or services provided the trustee withdraws from the decision. Paying a trustee's business without any of these in place is a breach even if the price charged was entirely fair.

What if there were no related party transactions in the year?

The accounts still have to say so. A silent accounts note is not an acceptable way of indicating there was nothing to report — the SORP expects an explicit statement that no related party transactions took place during the year if that is the case, precisely so a reader cannot tell the difference between 'none happened' and 'nobody checked.' An examiner or auditor will usually ask the trustees to confirm this point specifically, rather than accepting an accounts pack that simply omits the note altogether.

What happens if an examiner or auditor finds an undisclosed related party transaction?

It is one of the most common findings raised in independent examination reports and Charity Commission accounts monitoring reviews, and it typically results in a qualified examiner's or auditor's report, a request to restate the accounts with the missing disclosure added, and in more serious cases a Commission enquiry into whether the underlying payment had proper authority in the first place. The disclosure failure and the authority failure often surface together, because a transaction nobody wrote up is usually also one nobody formally authorised.

Does reimbursing a trustee's travel expenses count as a related party transaction needing this disclosure?

Not in the same way. Expenses paid to a trustee acting as the charity's agent are specifically excluded from the related party transaction rules, but every charity — on receipts and payments accounts as well as full SORP accounts — still has a separate, simpler duty to disclose the total amount of trustee expenses reimbursed in the year and the number of trustees involved, or to state that none were paid. The two disclosures serve different purposes and both need to be present.

Do small charities on receipts and payments accounts have to make these disclosures too?

The detailed related party framework in SORP module 9, with its six specific elements, applies to charities preparing accruals accounts under the SORP. Charities small enough to use receipts and payments accounts sit outside that specific framework, but they are not exempt from related party scrutiny altogether — they still have a distinct legal duty to disclose trustee remuneration, benefits and expenses, or confirm that none were paid, under the charity accounting regulations that apply regardless of which accounting basis is used.

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