The SRA Accounts Rules, Explained
Written and reviewed by the Legal Accountants editorial team. Last reviewed 28 July 2026.
The SRA Accounts Rules govern how firms in England and Wales handle money that belongs to clients. They are shorter than they used to be, but the core duties are strict, and getting them wrong is one of the fastest routes to an SRA problem.
This is what the rules actually require: what counts as client money, how the client account works, and the annual accountant's report that most firms holding client money have to obtain. They apply to solicitors in England and Wales; Scotland and Northern Ireland have their own separate regimes.
What Counts as Client Money
Client money is money you hold or receive that belongs to a client or a third party, rather than to the firm. That covers money held for a client's matter, money for unpaid fees or disbursements you have not yet billed, and money held as trustee or in a similar role. The moment it is client money, the rules attach to it.
The central duty is separation: client money is kept apart from the firm's own money, normally in a client account, and used only for the purpose it was given for. It is not a source of working capital, and it is not the firm's to borrow against, even briefly.
The Client Account and Its Discipline
Client money goes into a client account, held at a bank or building society, clearly identified as a client account. You pay client money in promptly, you only take money out for a proper purpose, and you keep records that show the position of every client's money at any time.
Two things catch firms out. The first is reconciliations: you have to reconcile the client account regularly and investigate differences, not just tick a box. The second is residual balances, small amounts left over on old matters, which quietly build up and have to be dealt with properly rather than ignored.
The Annual Accountant's Report
Most firms that hold or receive client money have to obtain an annual accountant's report from a qualified reporting accountant. There are exemptions for firms holding only very small amounts, and for firms holding money only from the Legal Aid Agency. The report, its deadline and the exemption have their own guide.
The report is a check that your handling of client money meets the rules. It is only sent to the SRA if it is qualified, meaning the accountant has found something that needs flagging, but the obligation to obtain one, and to keep the records that make it possible, sits with the firm all year.
Keeping on the Right Side of the Rules
The firms that find the rules painless are the ones whose client-account bookkeeping is kept current and reconciled through the year, not reconstructed before the report. The ones that struggle leave it, let residual balances pile up, and find problems the week the accountant arrives.
We keep the client-account side in order as part of the ongoing work, so the rules are met continuously and the annual report is a formality rather than a scramble. Where a firm is already behind, we get it straight first.