Academies Accounts Direction 2025/26: What’s Changed and What You Need to Do

The Academies Accounts Direction (AAD) 2025/26 has now been published by the Department for Education, setting out how academy trusts must prepare their financial statements for the year ending 31 August 2026.

While many of the updates may appear technical, several changes will have practical implications for trustees, finance teams and auditors.

Here’s a clear breakdown of what’s changed - and what academy trusts should be thinking about now.

What Is the Academies Accounts Direction?

The AAD is the core guidance document that academy trusts must follow when preparing their statutory accounts.

It sits alongside:

• The Companies Act 2006 

• Financial reporting standards (such as FRS 102)

• The Charities SORP

  
  

Compliance with the Direction is not optional - it forms part of an academy trust’s funding agreement.

Key Changes for 2025/26

Although this year’s updates are largely focused on clarifications and disclosures, they still require careful attention.

1. Simpler Trustees’ Report Disclosures

One notable change is the removal of the requirement to report trade union facility time.

This simplifies reporting and brings academy disclosures more in line with the wider charity sector.

At the same time, there are updates to energy and carbon reporting, particularly for larger trusts, reflecting increased expectations around sustainability and climate transparency.

2. Changes to Staff and Payroll Disclosures

There are several important clarifications around staff-related reporting:

• Restructuring costs: Payments in lieu of notice (PILON) must now be included within restructuring costs, ensuring consistent treatment of termination-related payments

• Higher-paid staff: Additional narrative is required where part-time or part-year staff would exceed £60,000 on a full-time equivalent basis

• Key management personnel (KMP): The definition has been expanded, with clearer requirements around disclosing remuneration, including amounts accrued across periods

  
  

These changes mean trusts will need more detailed data and clearer explanations in their accounts.

3. Related Party and Governance Clarifications

The Direction now confirms that related party disclosures apply where the principal or CEO is also a trustee.

This brings greater consistency with governance expectations and reinforces the importance of transparency in leadership arrangements.

In addition, updated definitions of “regularity” and “propriety” reflect the latest government guidance, placing more emphasis on:

• Compliance with legal and funding requirements

• Strong internal controls

4. Updates for Church Academies

There are minor clarifications around site improvements and property accounting for church academies.

While these are not expected to significantly change accounting treatments, trusts should review their current approach to ensure it remains compliant.

Looking Ahead: Preparing for SORP 2026

A key addition this year is a new annex focused on the upcoming Charities SORP 2026.

Although the new SORP won’t apply to most academies until 2026/27, the Direction encourages trusts to start preparing now.

Areas likely to be impacted include:

• Lease accounting (bringing more leases onto the balance sheet)

• Revenue recognition principles

• Enhanced narrative reporting

  
  

Early planning will be essential to avoid disruption when these changes come into force.

What Should Academy Trusts Do Now?

While the updates are not radical, they do require action.

Trusts should:

• Review their current disclosures against the new requirements

• Ensure systems capture the additional data needed for staff reporting 

• Update processes for restructuring and remuneration disclosures 

• Begin assessing the impact of SORP 2026 

• Brief trustees and senior leadership teams on upcoming changes

Taking a proactive approach now will make year-end reporting far smoother and less stressful.

Final Thoughts

The 2025/26 Academies Accounts Direction continues the trend towards:

• Greater transparency 

• Stronger governance 

• More detailed narrative reporting 

While many of the changes are subtle, collectively they raise expectations around the quality and clarity of financial reporting.

How We Can Help

At SJC, Chartered Accountants, we work closely with academy trusts to:

• Interpret updates to the Accounts Direction

• Prepare compliant and high-quality financial statements

• Strengthen governance and reporting processes

• Plan ahead for upcoming changes such as SORP 2026

If you’d like support with your year-end or understanding how these changes affect your trust, our team is here to help.

Get in touch today to ensure your academy is fully prepared.