Academies Accounts Direction 2025/26: What you need to know

The 2025/26 Academies Accounts Direction (AAD) was published at the end of March and, as in recent years, the changes are limited. However, there are some important new disclosures (and one notable removal) that academy trusts should be aware of as they approach year-end.

Below, we highlight the key developments and what they mean in practice.

1. Staff-related changes: 

A number of updates focus on staff cost disclosures, underlining the DfE’s continued interest in this area.

a) Staff earning over £60,000

Previously, this disclosure reflected actual earnings in-year only. This has now been extended to include:

• Employees who would earn over £60,000 on a full-time equivalent basis, and/or
• Those who would exceed £60,000 if employed for the full financial year

These staff who meet the threshold do not get added into the numeric “£60k+ banding table”; instead, the AAD requires a narrative note stating the notional band they would fall into. While similar information is already required for the Accounts Return, this will still create additional work, particularly when preparing comparatives.

b) Greater scrutiny on key management pay

There is a new requirement to disclose accrued remuneration for key management personnel (KMP), including:

• Amounts accrued in the current year; and
• Amounts relating to and accrued in prior periods but paid in-year

This disclosure will likely require additional explanations in the accounts for any KMP pay accrued but unpaid, and trusts should ensure they can demonstrate appropriate approvals for any off-payroll KMP

In addition, off-payroll arrangements with former members of key management personnel who continue to act as consultants to the trust or in similar roles MUST now be included within KMP disclosures.

c) Restructuring costs

A real change, the AAD states that including payments in lieu of notice (PILONs) within restructuring costs is a clarification. In practice, this is a change:

• Previously: explicitly excluded
• Now: explicitly included

Trusts should consider whether comparative disclosures for this change will be warranted.

d) Principal/chief executive disclosures

A clarification confirms that related party disclosures apply where the principal/chief executive is also a trustee.

2. Removal of trade union facility time disclosure

One simplification that many will welcome is the removal of the requirement to disclose trade union facility time in the trustees’ report.

3. Regularity and audit focus 

Updated definitions - the definitions of regularity and propriety have been updated in line with Managing Public Money (2025):

• Regularity now explicitly includes:
  • Legal authority
  • Budget compliance
  • Adherence to wider frameworks (e.g. procurement and subsidy rules)
• Propriety places greater emphasis on:
  • Governance standards
  • Public expectations
  • Alignment with government policy

This is less about introducing new rules and more about raising expectations of accountability, and auditors are likely to take a broader view when assessing decisions; for instance, an overspent budget could be considered a regularity breach.

New regularity test –  a new audit focus has been introduced on key management personnel remuneration. Auditors must now consider:

• Whether all KMP are on payroll
• Whether off-payroll arrangements have appropriate approvals
• Whether accrued but unpaid remuneration is properly authorised and recorded

While many firms will already cover these areas, this formalises expectations and may lead to increased scrutiny in practice.

4. Looking ahead – SORP 2026 (FRS 102 changes)

A new annex introduces early preparation guidance for Charities SORP 2026, aligned to updates in FRS 102. Ignoring any short accounting periods, this will apply from 31 August 2027 year-ends.

Key areas of change are lease accounting and revenue recognition. 

Although not yet mandatory, these changes are likely to have a material impact for some trusts, so early planning will be key.

5. Energy and carbon reporting – refined criteria

There is also an update to reflect changes in company law thresholds.

• Previously: based on “large company” status
• Now: tied to specific size criteria (based on the previous large company thresholds)

This creates an important quirk: from 31 August 2027, a trust may no longer be “large” under new company size thresholds, but still need to report energy and carbon information if it exceeds the old criteria.

Final thoughts

The 2025/26 AAD is less about sweeping reform and more about tightening expectations, particularly around:

• Transparency of higher paid staff costs
• Governance and accountability
• Audit scrutiny in key risk areas

While recent updates have felt relatively routine, this will change next year. The AAD 2026/27 will reflect SORP 2026, bringing much more significant change. Our recommendation: start early. Begin conversations with your auditors this autumn to understand the likely impact and avoid surprises.

Get in touch with your usual Larking Gowen contact, or send get in contact via enquiry@larking-gowen.co.uk.

Chris Yeates