Academy Funding 2025–26: What Your Trust Needs to Know

Academy funding is a core part of financial planning for academy trusts, free schools and alternative provision settings. The Department for Education’s General Annual Grant (GAG) Allocation Guide for the 2025–26 academic year sets out how funding has been calculated and what has changed compared with previous years.

Understanding your grant allocation in detail can help you plan budgets with greater confidence, from staffing and resources to pupil support and strategic investment.

What’s New in 2025–26

A key section of the guide highlights changes for the 2025–26 academic year:

1. Funding Calculations and Historical Grants

Three previously separate grants, Teachers’ Pay Additional Grant (TPAG), Teachers’ Pension Employer Contribution Grant (TPECG) and the Core Schools Budget Grant (CSBG) — are now incorporated directly into the Dedicated Schools Grant (DSG) and reflected in your funding formula. This change simplifies the allocation process and ensures like-for-like comparison when calculating the Minimum Funding Guarantee (MFG).

2. Removal of Flexibility for Reception Pupil Counts

Local authorities no longer have the flexibility to increase pupil counts for schools based on higher reception numbers from an earlier census. This change standardises the census basis for funding across settings.

3. Minimum Funding Guarantee (MFG) Adjustments

Local authorities are required to set the MFG between -0.5% and 0%, helping protect per-pupil funding levels from year to year. With the mainstream schools additional grant fully rolled into DSG, some historical adjustments are no longer needed within the formula.

These updates may seem technical, but they influence how your trust’s funding is calculated and reported, and therefore how you budget for the year ahead.

The concept of GAG pooling

GAG pooling is seen as the best way for Multi-Academy Trusts (MATs) to improve financial efficiencies in the sector.

The biggest reason behind the reluctance to adopt GAG pooling is culture change. The pooling of GAG is a shift from “my school” to “all children across the MAT”.

MATs have to become better at communicating the benefits of centralisation to get their schools on board with the concept.

GAG pooling supports the logic that MATs are single financial entities and can be used to:

• Smooth out disparities in funding between schools within a MAT

• Direct funds to schools that need to raise educational standards

• Direct funds to schools that require investment in facilities

• Direct funds to facilitate MAT policies that are being implemented to support the Trust’s vision
  

Funding Outside the GAG

In addition to GAG funding, many trusts will receive other revenue and capital streams, such as:

• Early years funding for nursery provision

• Pupil premium payments aimed at supporting vulnerable pupils

• High needs top-up funding for pupils with additional requirements

• PE and sport premium for physical activity support