What’s Changing for Academy Trust
With the new term in full swing, this update aims to keep things short and practical. A few changes are on the horizon, and it is far better for cash flow, closer HMRC scrutiny and fresh uncertainty around VAT treatment in the education sector.
Taken together, these issues make it more important than ever for trusts to take a joined-up approach to financial planning.
The Accounts Direction: looking ahead to 2026/27
The 2025/26 edition was a fairly light-touch. It clarified that payments in lieu of notice belong within restructuring costs, tidied some wording for church academy trusts, and updated the definition of propriety. The latter now focuses more explicitly on high standards of public conduct and on the governance expectations the Direction sets out.
The bigger story is the Charities SORP 2026. Trusts cannot adopt it early, and the 2026/27 Accounts Direction will reflect it. The areas to watch are lease accounting and revenue recognition. The lease change is applied prospectively, so it will appear as an adjustment in the 2027 balance sheet rather than as a restatement.
Suggestions for trusts:
- Tell your finance team and trustees early, so nothing comes as a surprise.
- Build the SORP changes into your year-end planning. Even better, introduce the SORP changes into your month-end reporting, so trustees see the changes throughout the year rather than for the first time at year-end.
- Start gathering lease information now. It’s far easier to do calmly in Autumn and Spring term than frantically in the Summer.
- Have a quick chat with us about anything unusual in your contracts.
The Academy Trust Handbook 2026: what accounting officers and CFOs should know
The new Handbook takes effect from 1 October 2026, a month later than usual, to give trusts a little extra time to prepare. After a few years of small tweaks, this edition has more substance. These are the points flagged for CEOs, CFOs and accounting officers.
A new summary statement for multi-academy trusts (5.32). MATs will need to publish a statement on their website alongside the annual accounts, by 31st January each year. It should explain the financial operating model (for example, whether GAG is pooled or top-sliced), the central services provided and how they’re charged, and a summary of income and expenditure by academy. The DfE has published an example, which is a good place to start.
Financial expertise on the board (1.31). Trustees should be able to show that the board and its committees have enough financial knowledge to challenge properly, with training considered especially for finance and audit and risk committee members. Trusts with local governance should take note too, as the expectation extends to local committees.
CFO qualifications (1.46). For trusts with more than 3,000 pupils, the DfE now expects the CFO to hold a recognised accountancy qualification at level 7 or equivalent. This becomes a firm requirement for new appointments from 1 September 2027, and existing post-holders aren’t affected. It’s still worth thinking about succession planning.
Senior pay (2.31 to 2.34). Executive pay should not rise faster than teachers’ pay without clear justification and advance DfE approval. For new appointments above £174,000 full-time equivalent, or with performance-related pay above £25,000, DfE approval is needed before the post is advertised.
Pensions (2.40). Trusts considering an alternative to the Teachers’ Pension Scheme or the LGPS will need to engage with the DfE early and get approval before anything is communicated to staff.
Going concern (2.21). The accounting officer must tell the board if the trust’s ability to continue as a going concern is at risk. Trustees remain responsible for acting and for informing the DfE.
Procurement and MIS (2.27 to 2.30). There are firmer expectations around agency staff, recruitment, energy contracts and Management Information System contracts.
Inclusion and SEND (1.16 to 1.20). Boards are encouraged to name a trustee or committee to oversee inclusion and SEND provision. It’s worded as a “should” for now, but realistically it as a strong signal.
Severance and the Secretary of State’s powers (5.7 to 5.14 and 6.17). There is more guidance on severance payments, and clearer wording on the remedial action the Secretary of State can direct where a trust breaches its funding agreement.
A welcome change on EV salary sacrifice (2.37)
Many of you will have seen the Department for Education’s recent guidance on electric vehicle (EV) salary sacrifice schemes for academy trusts and colleges. Importantly, EV salary sacrifice schemes no longer require DfE approval unless a trust is subject to a Notice to Improve.
Many trusts have been exploring these schemes as a way to enhance their employee benefits offering, support recruitment and retention, and contribute to sustainability goals. However, as with any employee benefit, it is important to undertake appropriate due diligence when selecting a provider.
One area trustees and executive leaders should consider particularly carefully is employer protection. Understanding how providers manage potential financial risks arising from early termination, long-term absence, maternity leave, resignation and other changes in an employee’s circumstances is essential.
Lloyds Bank recently hosted a webinar on EV schemes for schools and MATs and has kindly shared the recording and DfE guidance with us for those who would like to find out more.
A friendly reminder on payment fraud
Strong controls matter more than ever, and colleagues at Lloyds have shared some practical advice for trusts. Internal fraud is often reported where someone edits a BACS file after it’s been imported into Commercial Banking Online (CBO) but before it’s approved. These steps cost nothing and could save a trust a great deal.
- Freeze BACS files on import. The Primary Administrator can go to Administration, then Client ID Settings, and untick “Allow modification post-submit of Imported Payments.” Once submitted, a payment can’t be changed. Lloyds also has a help video that covers this.
- Have Faster Payments set up. It’s useful for urgent payments or as a back-up if the usual system fails, such as for salaries. It’s also a handy way to check beneficiary details on new supplier invoices, on top of the usual checks. International Payments can be added via a CBO amendment form.
- Switch on Dual Administration. A second approver is then needed for new users, payment control changes and approver permissions. Specifically, Lloyds suggests at least three administrators where possible, perhaps including a less senior colleague for day-to-day tasks.
- Audit users and roles regularly, especially after staff changes.
- Review BACS limits at least annually, particularly while costs keep rising.
These fit well with the Handbook’s emphasis on financial oversight and internal control, so they’re worth raising at the next audit and risk committee.
A short checklist to take away
- Plan the MAT summary statement and put the 31st January deadline in the diary.
- Review trustee financial training and committee expertise.
- Check the scheme of delegation, senior pay approvals and procurement practices.
- Start lease and revenue recognition groundwork for the SORP, and build it into month-end reporting.
- Tighten CBO settings.