Academies Accounts Direction 2025 to 2026: What academy trusts need to know
The Department for Education (DfE) published the updated Academies Accounts Direction (AAD) 2025 to 2026 on 25 March 2026. The guidance applies to academy trust accounting periods ending on 31 August 2026 and is accompanied by updated model accounts and a revised external auditors’ guide.
While many of this year’s amendments are focused on improving clarity and narrative disclosures, there are several more substantive changes that academy trusts should be aware of, particularly around remuneration reporting, governance disclosures and audit expectations.
The update also introduces a new Annex B, providing an early indication of changes expected under SORP 2026.
Changes to the trustees’ report
Removal of trade union facility time disclosures
Academy trusts are no longer required to include disclosures relating to trade union facility time within the Structure, Governance and Management section of the Trustees’ Report.
Updated streamlined energy and carbon reporting (SECR) requirements
The AAD now clarifies which organisations fall within the scope of SECR reporting. This change reflects the fact that recent increases to UK company size thresholds (effective from 6 April 2025) are not aligned with SECR, which continues to apply the original large company thresholds.
Clarifications to key definitions and accounting treatment
Updated definition of regularity
The definition of regularity has been expanded and now specifically references:
• Having a sufficient legal basis
• Parliamentary authority
• Compatibility with Treasury authorisation
• Alignment with spending budgets and the wider legal framework
Updated definition of propriety
The concept of propriety has been strengthened to explicitly include maintaining high standards of public conduct and complying with parliamentary expectations and control procedures.
Capital grants in church academy trusts
Additional guidance has been introduced regarding capital grants received by church academy trusts. The update references FRS 102 asset recognition criteria and places greater emphasis on assessing control over improved assets.
Updates to the Model Accounts
Governance statement requirements
For academy trusts with annual income above £50 million, the governance statement has been updated to clarify that internal scrutiny arrangements can include in-house internal audit services, which was not explicitly referenced previously.
Expanded disclosure of special payments and significant transactions
Additional categories of transactions must now be disclosed, including:
• Compensation and ex-gratia payments
• Debt write-offs
• Guarantees, letters of comfort and indemnities
• Acquisition or disposal of freehold land and buildings
• Disposal of heritage assets
• Land and building lease arrangements
• Gifts made by the trust
Staff restructuring costs
Trusts must now disclose all payments in lieu of notice, regardless of whether they are contractual or non-contractual.
Enhanced remuneration disclosures
There are notable changes to salary reporting requirements.
For the £60,000 banded salary disclosure, trusts must now provide narrative explanations where:
• Part-time employees would exceed the threshold on a full-time equivalent basis (including identification of the relevant £10,000 band), or
• Employees worked only part of the year but would exceed the threshold if annualised
The Key Management Personnel remuneration note has also been expanded and now requires:
• Separate disclosure of accrued remuneration
• Separate disclosure of accrued remuneration relating to the Accounting Officer
• Disclosure of approved off-payroll arrangements (for example, Accounting Officer or CFO arrangements approved by the DfE)
• Disclosure of consultancy income paid to former key management personnel
Related party disclosures
Where the principal or chief executive is also a trustee, salary and benefits paid to that individual must now be separately disclosed within related party transactions.
External audit framework and guidance updates
Changes have also been made to the external auditors’ guide.
Expanded limitation of scope guidance
Additional guidance now addresses circumstances where requested management representations are not provided to auditors on a timely basis.
Simplified severance payment guidance
The section covering delegated authorities and special severance payments has been streamlined to remove duplication with the Academies Trust Handbook.
New auditor responsibilities
A new subsection in Annex C introduces additional audit procedures requiring auditors to:
• Confirm all key management personnel are included on the trust payroll
• Verify DfE approval for off-payroll arrangements
• Confirm approval for accrued but unpaid remuneration
Preparing for year-end
Although many of the changes are disclosure-led, trusts should not underestimate the additional information gathering and review required ahead of year-end reporting. Early consideration of remuneration disclosures, governance reporting and audit evidence will help reduce delays during the audit process.
If you would like support understanding how the updated Academies Accounts Direction may affect your academy trust, our education specialists are here to help.