Education update: 2025/26 Academies updates from the Department for Education (DfE)

Each year we summarise the key changes that are likely to impact academies in advance of year end reporting to ensure that everyone is prepared. Here is our summary of the latest factors that might impact academies:

Academy Accounts Direction (AAD) 2025-26

The Academies Accounts Direction (AAD) 2025 to 2026 was published on 25 March 2026, providing guidance for academy trust’s annual financial statements for the 2026 financial year. The key changes are:

• Removing the requirement to report trade union facility time in the Structure, Governance and management section of the Trustees Report
• Clarification of the thresholds for which streamlined energy and carbon reporting applies. Being those who satisfy two or more of the following conditions:
  • gross income of £36m or more
  • balance sheet assets of £18m or more
  • 250 employees or more

For those academy trusts that meet the thresholds, and have consumed more than 40,000 kWh of energy in the reporting period, must publish the following information in the Trustees’ report:

• UK annual energy usage in kWh as a minimum relating to gas, purchased electricity and transport fuel
• an emissions intensity ratio which compares emissions data with an appropriate business metric or financial indicator, such as pupil numbers, to allow comparison over time or with other organisations
• the methodologies used in calculation of disclosures
• a narrative of measures taken to improve energy efficiency in the reporting period. If no measures have been taken, this should be stated

Other than in the first year of reporting, prior year equivalent figures must also be disclosed for comparison.

Where an academy does not consume more than 40,000 kWh of energy in a reporting period, it qualifies as a low energy user and is exempt from reporting under these regulations. A statement to this effect should be included in the Trustees’ report – more information can be found here.

 

• Updates to the definitions of regularity and propriety to reflect those in the latest edition of Managing Public Money. Regularity is about whether money is being used in the right way, according to the relevant authorities, and has the proper approval. Propriety is concerned more with standards of conduct, behaviour and corporate governance
• Clarification that payments in lieu of notice (whether contractual or non-contractual) must be disclosed as part of restructuring costs
• Clarification over the disclosure requirement for higher paid staff who are part-time or only worked for part of the year. The salaries of these individuals needs to be prorated and disclosed as if they worked full time or for the full year
• Updates to the definition of key management personnel and the disclosure of their employee benefits. Key management are now defined as ‘ those persons having authority and responsibility for planning, directing and controlling the activities of the academy trust, directly or indirectly’, rather than just ‘the trustees and the senior management team’ as previously defined
• Clarification that the related party transactions disclosure includes salary and benefits paid to the principal/chief executive in their capacity as a member of staff
• Acknowledgement of the new Charities SORP, published on 31 October 2025, and confirming that Academies must not early adopt this. Therefore, there will be no implications for the 2026 financial statements, but the 2027 financial statements will need to be prepared on the basis of the updated standards. Academies should consider assisting readers of their financial statements for the year 2025 to 2026 by referencing the upcoming changes in their trustees’ report for 2025 to 2026. See our summary of the requirements of the SORP 2026 here 

The full guidance can be found here.

Model Accounts 2025-26

The following areas have been updated in the latest model accounts (published 25 March 2026):

• Updated text in the Trustees’ Report in relation to streamlined energy and carbon reporting
• An update to reflect the Academy Trust Handbook 2025 that states Trusts with income over £50m, based on their last audited accounts, must use either an in-house internal auditor or a bought-in internal audit service (rather than a non-employed Trustee or an independent peer review by another academy trust) to carry out its internal scrutiny. From 1 September 2025 this has been a requirement and not a suggestion
• A reminder of the requirement to disclose certain categories of transaction. For example, special payments, debt write offs, acquisition or disposal of freehold land and buildings or taking up a leasehold on land and buildings
• Additional guidance around the disclosure of higher paid staff and key management personnel, in line with the Accounts Direction clarification noted above

We provide template Financial Statements to our clients that flag any changes / areas for consideration in advance of the summer break so they can easily be identified where they are included.