On 25 March 2026 the Department for Education (DfE) published the Academies Accounts Direction 2025 to 2026, which applies to academy trusts preparing accounts for periods ending 31 August 2026. The Accounts Direction is again accompanied by a set of model accounts.
While the 2024–25 Accounts Direction saw relatively few technical updates, the 2025-26 edition introduces a wider range of changes, however these largely relate to disclosure requirements and clarifications as set out below.
Summary of changes in the 2025–26 Direction
Removal of the duty to report trade union facility time within the annual report
Previously, academies were required to include disclosures around the number of employees and the proportion of their time and wage bill spent on trade union activities. These provisions will no longer apply for 2026 which should not only simplify the disclosures included within the Annual Report but also more closely aligns academy accounts with the wider charitable sector.
Updates to Streamlined Energy and Carbon Reporting (SECR) guidance
UK regulations require companies which satisfy certain size conditions and consume more than 40,000 kWh of energy to include energy and carbon information in their accounts. The 2026 direction has aligned the thresholds for reporting this information to the latest Companies Act size criteria, which are turnover of £36 million, balance sheet total of £18 million and 250 employees (two of the three conditions must be met for two consecutive years to be within scope). The DfE has published further guidance to assist academy trusts in this area.
Notwithstanding the financial statement disclosures, there is an expectation now for Academy Trusts to have in place a Climate Action Plan and evidence progress against this. We would encourage academies to consider whether their financial statement disclosures could be enhanced to demonstrate their work in this area,
Clarification on staff-related disclosures
The latest Accounts Direction clarifies that payments in lieu of notice (PILON) should be recognised within restructuring costs. This brings consistency to the classification of termination‑related payments.
There are now expanded disclosure requirements for higher‑paid staff (those over £60,000) confirming that narrative around FTE‑adjusted and part‑year employees (where pro-rated remuneration is over £60,000) must be included within the banded remuneration disclosures.
The definition of key management personnel (KMP) has been expanded to include arrangements where a former member of KMP continues to receive remuneration through a consultancy or similar arrangement, and payments made to these individuals should be disclosed as KMP remuneration. There is also reference to amounts of KMPremuneration accrued in an accounting period, and clarification that these amounts form part of the financial statement disclosures in the accounts.
Related party transactions
Clarification has been included that the related party disclosures apply to remuneration where the Principal/CEO is also a Trustee.
Revised definitions of “regularity” and “propriety”
Following the June 2025 update to the Managing Public Money guidance, the definitions within the Accounts Direction now reflect strengthened expectations regarding Parliamentary authority and legal compliance, with more emphasis placed on ensuring internal controls are in place to manage compliance. This will be important for academies to consider throughout the year and could impact the year-end regularity statement made by the Accounting Officer and assurance work thereon, although the Accounts Direction continues to emphasise the need for professional judgement in this area.
Academy conversions
There have been no changes to the guidance on accounting for academy conversions or transfers and as in prior years there is a template included in the Accounts Direction showing the required disclosures (section 3.30 of the Accounts Direction 2025-26). Whilst this is unchanged compared to prior years it remains a helpful reminder and may be particularly relevant following the latest White Paper where the government’s desire to see all schools within Academy Trusts could lead to an increased level of conversions in the coming years.
The impact of the new Charities Statement of Recommended Practice (SORP) on academy accounts
The latest Charities SORP was released in October 2025 and will apply to most academy financial statements for the year ending 31 August 2027. The guidance in the latest Accounts Direction notes that academies are not able to adopt the new SORP earlier than their 2027 year-end and have confirmed that the 2027 Accounts Direction will reflect the updated guidance. Annex B of the 2025-26 Direction includes further details to help academies prepare, which have been summarised below:
The latest SORP effectively removes the distinction between operating and finance leases, meaning all significant leases should be recognised on the balance sheet as a right of use asset and a lease liability. Whilst no specific guidance is yet available in relation to PFI leases for academies, any such leases which are recognised as an operating lease arrangement will need to be considered in the context of the new Charities SORP and may have a significant impact on academy balance sheets. Any changes to the way leases are accounted for is prospective only and will be reflected as an adjustment in the 2027 balance sheet.
The latest SORP includes updated guidance relating to the recognition of revenue with more emphasis on performance obligations, however this is not expected to significantly impact the recognition of grant income for academies.
Next steps
Whilst the main changes in the 2025-26 Accounts Direction relate to disclosure clarifications, academy trusts should consider these as they begin to plan for their 2026 year-end.
We would also encourage academy trusts to consider the impact of the latest Charities SORP in the coming months, and in particular the new lease accounting requirements. It will be important to ensure that senior leadership teams and trustees are aware of the changes, and that accounting systems and processes are ready to accommodate the new requirements in time for the effective date.
Please feel free to get in touch if you would like to discuss any of these changes or require support with your year-end process.
