The 2025 investment funds SORP: What you need to know
The 2025 Statement of Recommended Practice (SORP) for UK investment funds is now in effect for accounting periods from 1 January 2026. With the first full reporting cycle for 31 December 2026 year ends underway, and 30 June 2026 interim reports also in scope, fund managers need to understand the key changes and their implications.
Key changes and their implications
1. Mid-market pricing replaces bid pricing
One of the most notable shifts is the move from bid price valuation to mid-market pricing for listed investments.
This change is now required under both the SORP and updated FRS 102, which states that the fair value should be the most representative price within the bid-ask spread. In practice, this will now be the mid‑market price.
Key points:
- The change may be applied prospectively; comparative figures do not need restating.
- Accounting policies must be updated to explain the switch and clarify that prior year values were based on bid prices.
2. Streamlined transaction cost disclosures
The previous requirement to split transaction costs by asset class has been removed. Funds now only need to disclose:
- The total cost of purchases and sales, before and after direct transaction costs.
- A breakdown of each type of transaction cost included in those totals.
This simplification should ease preparation while still providing investors with meaningful information.
3. Reduced and refocused risk disclosures
Perhaps the most significant trimming comes in the risk disclosure section.
Risk reporting has been scaled back compared with the 2014 SORP, which drew heavily from EU-derived frameworks. The new approach aligns with FRS 102, removing extensive prescriptive detail.
Managers still need to ensure disclosures are relevant and useful, but the new framework allows teams to focus on what matters to investors.
4. Clearer approach to fair value hierarchy
Fair value hierarchy disclosures are now integrated into the investment breakdown rather than presented separately.
The SORP includes an updated illustrative example, helping firms adopt a more streamlined and intuitive presentation.
5. More structured distribution policy disclosures
The distribution policy requirements have been tightened and clarified. Funds must now provide clearer information on:
- Income reserves.
- Amortisation and allocation policies.
- Movements between capital and revenue
- Differences between accumulation and income units.
- Charity-specific rules where relevant.
These are not necessarily new topics but the updated SORP is more prescriptive about how they should be presented.
6. New going concern disclosure requirements
Funds must now explicitly disclose:
- Whether the accounts are prepared on a going concern basis.
- How the authorised fund manager reached this conclusion.
- The basis of preparation where going concern is not appropriate.
This development enhances transparency and investor confidence, as the previous SORP did not require these disclosures.
7. Simplified portfolio statements
Several detailed requirements that once applied to portfolio statements, such as classifying investments by listing status, have been removed. The result is simpler, investor-focused reporting that prioritises clarity.
What this means for fund managers
The 2025 SORP is a modernisation that aligns reporting with today’s regulatory landscape, enhances clarity and trims disclosures that had become overly detailed.
For many firms, early preparation is essential – particularly around revenue, pricing methodologies, distribution policies and going concern assessment.
How we can help
Our expert financial services team helps you:
- Assess the impact of the new SORP on your funds.
- Update your accounting policies and disclosures.
- Prepare for interim and year‑end reporting under the new rules.
- Train finance and reporting teams on key developments.
Get in touch with us to ensure your fund navigates the SORP changes effectively and delivers clear, efficient reporting for investors.
