Academy trust lease changes delayed to Sept 2024

Lease changes affecting academies have been delayed until September 2024.

In the decade or so since the sector was formed, academy trusts have not been able to take out finance leases to purchase equipment and other assets without the explicit permission of the ESFA.

With a government focus on reducing net borrowing, this has effectively been an almost total ban on finance leases. 

In March of this year the ESFA announced changes around the leasing rules that were due to take effect from 1 September 2022. This was part of the overall UK government’s adoption of a new accounting standard (IFRS16).

The upshot of this change was that academy trusts would be able to purchase certain assets under finance leases if they were included on the ESFA published list of permitted items.

On 13 July 2022, the ESFA announced that these changes had been delayed until at least 1 September 2024. This is due to an overall delay in the government adopting the new accounting standard.

This means that the existing rules on taking out leases will continue to apply until at least 1 September 2024 – i.e. no finance leases are permitted except with the permission of the ESFA.

Academy trusts should therefore continue to assess any new leasing arrangements to determine if they are operating or finance in nature.

If you have any concerns about the implications of this change in direction for your academy trust then please get in touch with our academies team.