A guide to new mainstream free school revenue funding: 2025 to 2026
Updated 8 October 2025
Applies to England
© Crown copyright 2025
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This publication is available at https://www.gov.uk/government/publications/mainstream-free-school-revenue-funding/a-guide-to-new-mainstream-free-school-revenue-funding-2023-to-2024
This guidance is for free schools opening in the 2025 to 2026 academic year.
It sets out:
- how we’ll calculate revenue funding for new free schools
- the funding rates for the 2025 to 2026 academic year
- the financial governance and accountability requirements for trusts
The financial management and governance self-assessment tool helps trusts to assess a free school’s financial governance and compliance before opening.
This guidance does not cover funding for:
- special free schools
- alternative provision free schools
- 16 to 19 free schools
- free schools open before September 2025
- any initial funding to help free school proposers develop their projects before opening the school
- capital funding including annual costs of leasing premises
- Value Added Tax (VAT) - when open you can claim back any VAT paid on non-commercial activity, directly from HMRC via the VAT scheme for academies
School resource management
Effective schools make the best use of resources to have the maximum impact for their pupils. Schools that do this well tend to:
- plan their curriculum and finances together (known as integrated curriculum and financial planning)
- have a strategic approach towards financial planning for the longer term (3 to 5 years)
- deploy their staff effectively and efficiently, linked to their long-term plan
- have robust challenge from financially skilled governors and head teachers
- have skilled staff responsible for managing finances and procurement
- have transparent financial systems and processes
School resource management (SRM) offers a suite of free tools and guidance to help schools and academy trusts get the best value from their resources and maximise the impact on pupil outcomes.
A self-assessment checklist is also available to helps academy trusts check they are managing resources effectively and identify any adjustments they need to make.
You can access the Department for Education’s (DfEs) get help buying for schools procurement service for free and impartial support, advice and guidance. Here you can access approved DfE-frameworks which can help you save time and money on regular purchases such as supply teachers, energy, cleaning services, and ICT.
School resource management advisers (SRMA) provide free, independent and tailored advice and support on using your schools resources to maximise outcomes for pupils.
To receive regular updates about school resource management tools, support and guidance, sign up for the school business professional newsletter.
Financial planning
Free schools should plan their expenditure using the most up to date financial template. This will make sure your school is affordable within the funding we provide.
Contact your Regions Group delivery officer for the latest version of the template which contains the 2025 to 2026 funding rates.
If you do not have a delivery officer, contact the regional office for your area.
You should update your financial plan as you:
- develop your plan for the school
- appoint staff
- develop site plans
- establish your costs
- get confirmation of your funding arrangements
You should review your financial plans regularly to make sure they reflect the:
- likely number of pupils based on the number of applications received
- funding arrangements for each new academic year
We need assurance that free schools are on-course to be financially viable on opening. To provide a sustainable, broad and balanced curriculum:
- primary provision should have a minimum of 2 forms of entry of 30 pupils (total of 60)
- secondary provision (years 7 to 11) should have a minimum of 4 forms of entry of 30 pupils (total of 120)
Do not base your financial plans on fewer pupil numbers unless we have agreed this.
For presumption free schools, your local authority and trust will determine the minimum number of pupils you need to be financially viable. We expect local authorities to provide sustainable underwriting arrangements to support the pupil forecasts they have agreed.
Submitting your financial plans
We ask free schools in the pre-opening stage to submit their current financial plans before entering into a funding agreement. This should include a version modelled around the minimum number of pupils you need to be financially viable.
You’ll need to resubmit your financial plans before your readiness to opening meeting. This should be based on the latest available number of accepted offers.
Submit your plans with evidence to underpin your pupil number assumptions which must be realistic and achievable. Your plans should reflect:
- your income which you base on your estimates of available grants
- your outgoings
- the likely number of pupils
Plans should show that you will not go into deficit at any point. We expect to see in-year surpluses of no more than 5%, including any contingency.
You need to provide a final finance plan ahead of opening. This will be used to determine your initial funding. Your delivery officer will give you the date that you need to do this by.
The financial benchmarking service allows you to compare your spending patterns to schools in similar circumstances.
Funding
In 2025 to 2026, the following funding will be available once open:
- local pre-16 formula funding
- national 16 to 19 formula funding
- pupil premium
- business rates grant
- special educational needs top-up funding (high needs)
- teachers’ pay additional grant
- teacher’s pension employer contribution grant
- teachers’ pay and pension employer contribution funding
- universal infant free school meals
- PE and sport premium
- post-opening grant (free schools set up through the local authority presumption route are not eligible for this grant)
Payments
DfE usually calculates and pays the funding for each free school. We pay schools their funding monthly in equal instalments. This is usually on the first working day of the month. The only exception will be in your first month of opening, when DfE will pay you on the sixth working day of the month.
Local formula funding (pre-16)
We provide funding for schools, high needs and early years through the dedicated schools grant. The national funding formula (NFF) distributes school funding to local authorities. We base the formula on the individual needs and characteristics of every school in the country.
We’ll fund any new free schools consistently with other schools. This includes free school that:
- are not yet open but are in the pipeline
- will enter the pipeline during 2025 to 2026
In 2025 to 2026, local authorities will remain responsible for setting local funding formulae which determine individual schools’ budget allocations. However, we require local authorities to move their local formulae closer towards the national funding formula in 2025 to 2026.
It is these local formulae that underpin how much core funding each academy and free school receives through the general annual grant (GAG).
Further information on the factors that make up the local formulae, as well as the minimum per pupil funding levels that local authorities must comply with in their formulae are available in the schools operational guide: 2025 to 2026.
National 16 to 19 formula funding
We use a national funding formula to calculate allocations for 16 to 19 institutions each academic year. You can find more information on the funding rates and formula from:
- 16 to 19 funding: how it works
- funding guidance for young people 2025 to 2026 rates and formula
- 16 to 19 funding: information for 2025 to 2029
New free schools planning to offer 16 to 19 provision in their first 2 years of opening will be able to submit a business case before they open. Your delivery officer will contact you if you’re in scope to check if you want to submit a business case.
If we approve your business case, we’ll use the approved factors instead of using averages. We’ll use your data to calculate institution specific factors from year 3.
2025 to 2026 national funding rates
For new free schools, we’ll assume that all students are full-time and under 18 unless you tell us otherwise. Students will attract the band 5 national funding rate of £5,105 per student.
Retention
For new free schools, we’ll use the national retention average of 0.98516 for the 2025 to 2026 academic year.
Programme cost weighting
For new free schools, we’ll use the national programme cost weighting average of 1.06076 for the 2025 to 2026 academic year.
English and maths funding
For new free schools, we’ll use the national average instances per student of 0.0744 for English and maths funding.
This is a new funding element for the 2025 to 2026 academic year. Find out more information about 16 to 19 funding: English and maths.
For new free schools, we’ll use the national average instances per student of 0.09904 for English and maths funding.
Disadvantage funding
For new free schools, we’ll use the local authority average for disadvantage block 1 and the national average of 0.14059 for disadvantage block 2.
Area cost uplift
You can find more information about the area cost uplift from the guidance on 16 to 19 funding: how it works.
High value course premium
For new free schools, we’ll use the national average of 0.32744 for the 2025 to 2026 academic year.
Find more information about high value courses premium.
Discretionary bursary funding
You can find more information about discretionary bursary funding from the 16 to 19 Bursary Fund guide 2025 to 2026.
High needs funding
You’ll receive £6,000 per student for each high needs place identified by local authority commissioning plans and decisions.
More information about high needs funding is available.
16 to 19 formula funding
Other elements of the funding formula are not applicable to new free schools. This includes:
- the large programme uplift
- advanced maths premium
- T levels
- core maths premium
Find out more from funding for 16 to 19 year olds in schools.
Pupil number adjustment
We need robust and realistic estimates of pupil numbers to ensure that we fund the school accurately. In the first year of opening, an early pupil number adjustments exercise will happen. If the October census shows that the school has not admitted the predicted number of pupils, we’ll recover any excess funding in the following academic year.
If a school has recruited more pupils than they got funding for, DfE will carry out an in-year reconciliation. They will pay any additional funding in February of the current academic year. DfE will initially base allocations on an estimated number of pupils and local authority average pupil characteristic data.
Any positive or negative adjustment will use the actual pupil characteristics returned in the October census. They will replace the averages initially used if it produces a more favourable outcome for the school.
From the second year of opening, we carry out the in-year reconciliation for the number of pupils. They will pay any additional funding in July of the current academic year. Any recoveries will start in the following academic year.
If academies have a positive pupil number adjustment and an outstanding pupil number adjustment, DfE will:
- reduce the pupil number adjustment by the amount of the outstanding debt
- if there is a net negative adjustment, use the positive amount to offset the debt and confirm any agreed deferrals or repayment plans against the lower amount
More information is available in the guidance for academies funded on estimated pupil numbers.
Where local authorities have already funded for growth in pre-16 pupil numbers to meet basic need, we will deduct the amount they have paid from any positive pupil number adjustments. This will ensure that academies are only funded for the growth once.
Pupil premium
The pupil premium provides schools with extra funding to improve education outcomes for disadvantaged pupils. It is not a personal budget for pupils and carries no individual entitlements.
In 2025 to 2026 schools will receive the funding for each pupil registered as eligible for free school meals at any point in the last 6 years.
Schools will also receive funding for each pupil who has left local authority care through:
- adoption
- a special guardianship order
- a child arrangements order
- a residence order
We make pupil premium payments in quarterly instalments. We calculate a school’s pupil premium allocation from the information it submits in the October school census (the January census is used for pupil referral units and alternative provision). We apply allocations from the start of the next financial year (April), paid in arrears so first payments are made in June.
Local authorities will also receive funding for each looked-after child in their care. The funding should be used on evidence informed interventions that are clearly linked to robust personal education plans and in line with the menu of approaches, in consultation with the child’s school. They can pass all the funding on to schools or retain some to fund activities that will benefit a group, or all, of the local authority’s looked-after children.
Teachers’ pay and pension employer contribution funding
Teachers’ pay
In 2025 to 2026, teachers and headteachers in maintained schools are receiving a pay award of 4%.
DfE is providing £615 million to schools in 2025 to 2026 to support schools with additional costs, including staff pay awards.
Of the £615m of additional funding, £470m of this is going to mainstream schools through the schools budget support grant (SBSG) and £80m is going to high needs settings through the existing core schools budget grant (CSBG).
SBSG funds the following mainstream school providers, for the 5 to 16 year old age range:
- primary and secondary maintained schools
- primary and secondary academies and free schools
- all-through maintained schools
- all-through academies and free schools
- city technology colleges
The funding rates for the SBSG in 2025 to 2026 are published on schools budget support grant (SBSG) 2025 to 2026: methodology.
Teachers’ pensions
The teacher pension employer contribution grant (TPECG) provided £1.1 billion in 2024 to 2025 to support with the increase to the teachers’ pension employer contribution rate.
TPECG 24 provided funding for the following mainstream school providers, for the 5 to 16 year old age range:
- primary and secondary maintained schools
- primary and secondary academies and free schools
- all-through maintained schools
- all-through academies and free schools
- city technology colleges
TPECG funding will be rolled into the schools’ national funding formula (NFF) from 2025 to 2026 to ensure it remains a protected part of schools funding. Academies will receive an additional payment of TPECG to cover the period April to August 2025, before this funding is rolled into the general annual grant (GAG) from September 2025.
Business rates grant
Mainstream free schools pay business rates at the 80% discounted charitable rate. They get a grant to cover the actual costs paid.
You can claim for national non-domestic rates. Your billing authority may submit a claim on your behalf.
Special educational needs top-up funding (high needs)
Mainstream free schools get extra funding for pupils aged 5 to 19 with high needs from the local authority which commissioned the place. These pupils usually have an education, health and care plan.
We expect schools to fund the first £6,000 of additional educational costs (over and above standard teaching and learning) for each high needs pupil from their own budget.
More information about high needs funding is available.
Universal infant free school meals
State-funded schools in England must provide free lunches to infant pupils who are not otherwise entitled to benefits-related free school meals.
Schools will receive an initial provisional payment in October based on:
-
the pupil numbers estimate we use to issue your indicative funding letter
-
the average universal infant free school meals take up rate in your local authority
We’ll adjust it to reflect actual pupil numbers in July. We’ll base this on meal take-up to date from the October and January school census. The July payment will also include an additional allocation for the first 2 terms of the next academic year.
Find out more about universal infant free school meals.
PE and sport premium
Free schools with primary age pupils receive PE and sport premium funding. We base this on the number of pupils in years 1 to 6. In cases where schools may not have set year groups (for example, in some special schools), we base this on the number of pupils aged 5 to 10. This grant is to make improvements to the quality of physical education (PE), physical activity and sport schools offer. We pay this separately to general annual grant funding.
We base school allocations on the January school census. For example, January 2025 census for the 2025 to 2026 academic year. For free schools that open in September 2024, we’ll base the funding on the data from the Autumn census. We will make payments in the following March.
The free school will receive PE and sport premium funding for a new academic year from DfE in 2 separate payments. These are:
- 7/12 of the funding allocation in November 2025 (or in March 2026 for new schools)
- 5/12 of the funding allocation in May 2026
Post-opening grant - central route projects only
We provide free schools with a post-opening grant. Free schools set up through the local authority presumption route are not eligible for the post-opening grant.
The post-opening grant covers additional costs in establishing a new publicly funded school which are not covered by the general annual grant. It provides funding in 2 elements as the free school grows:
- non-staffing resources, paid on a per-pupil basis
- a leadership grant
We pay the resources element each year that the school builds up to capacity for each new pupil expected to be on roll. We do not revise it after opening to reflect actual pupil numbers. We take these numbers from the final finance plan you submit before opening. We pay it at the following rates:
-
£250 for each new mainstream pupil in the primary phase (reception to year 6)
-
£500 for each new mainstream pupil in the secondary and 16 to 19 phases (years 7 to 13)
We pay it over the first 3 months of the academic year. 50% paid in month 1, 25% in month 2 and 25% in month 3.
We pay the leadership element each year based on the number of year groups that the school will ultimately have that do not yet have pupils. The amount we pay depends on how many year groups (cohorts) are empty. We pay it in equal monthly instalments.
Primary
| Number of year groups empty | Funding amounts |
|---|---|
| 6+ | £80,500 |
| 5 | £67,500 |
| 4 | £54,000 |
| 3 | £40,500 |
| 2 | £27,000 |
| 1 | £13,500 |
| Maximum | £283,000 |
Secondary (regardless of whether the school plans to have a sixth form)
| Number of year groups empty | Funding amounts |
|---|---|
| 4 | £125,000 |
| 3 | £93,500 |
| 2 | £62,500 |
| 1 | £31,000 |
| Maximum | £312,000 |
All-through (regardless of whether the school plans to have a sixth form)
| Number of year groups empty | Funding amounts |
|---|---|
| 6+ | £125,000 |
| 5 | £93,500 |
| 4 | £62,500 |
| 3 | £54,000 |
| 2 | £40,500 |
| 1 | £27,000 |
| Maximum | £402,500 |
Nurseries
Free schools do not receive funding under the free school programme for nursery places. To receive funding for nursery places, free schools should register with their local authority. They will provide funding for the government entitlements where appropriate.
From 2025 to 2026, the entitlements are:
- the 15 hours entitlement for eligible working parents of children from 9 months to 2 years old (increasing to 30 hours from September 2025)
- the 15 hours entitlement for disadvantaged 2 year olds
- the universal 15 hours entitlement for all 3 and 4 year olds
- the additional 15 hours entitlement for eligible working parents of 3 and 4 year olds
Government funding is intended to deliver 15 or 30 hours a week of free, high quality, flexible childcare. The 15 or 30 hours must be able to be accessed free of charge to parents. There must not be any mandatory charges for parents in relation to the free hours. Government funding is not intended to cover the costs of meals, other consumables, additional hours or additional services.
Local authorities should ensure childcare providers are aware they can charge parents for the following extras in connection with the free hours but these charges must be voluntary for the parent:
-
consumables to be used by the child, such as nappies or sun cream
-
meals and snacks consumed by the child
-
extra optional activities such as events, celebrations, specialist tuition (for example music classes or foreign languages) or other activities that are not directly related or necessary for the effective delivery of the early years foundation stage (EYFS) statutory framework
Providers can also charge parents for any additional, private paid hours according to their usual terms and conditions provided taking up private paid hours is not a condition of accessing a free place.
Local authorities must take all steps available to ensure the free entitlements are available free of charge and therefore that providers do not charge parents for certain services in connection with the entitlement hours, including top-up fees.
For further information on the entitlements, please see the early education and childcare statutory guidance for local authorities.
Free schools are also able to offer nursery provision which exceeds any local authority funded entitlement. This includes for under 3 year olds. Subject to your funding agreement, you can charge parents for these places. You can so this through a subsidiary company, or by contracting an independent provider who levies charges.
Risk protection arrangement
Risk protection arrangement (RPA) is an alternative to commercial insurance, whereby government funds cover any losses that arise. The RPA will cover losses that are in scope of the RPA membership rules.
The RPA membership year runs from 1 September to the following 31 August. You can join at any time. Free schools can join the RPA scheme and receive cover before opening. There is no cost or premium to join the RPA in pre-opening. Free schools in the pre-opening stage, should discuss joining the RPA scheme with their delivery officer.
Once a school is open, we will deduct the per-pupil cost at source from the free school’s general annual grant. The cost of RPA for the academic year (1 September 2025 to 31 August 2026) will be £27 per pupil.
Free schools do not have to join the RPA scheme and can make alternative insurance arrangements.
Financial governance and accountability
Trusts will need to ensure that spending decisions are transparent, and in the school’s best interests. Free schools will need:
- sound financial procedures
- the capacity to handle public money
- good governance arrangements
On opening, you will need to:
- have a robust framework to manage your funding
- make sure you maintain proper accountability and procedures
Academy trust handbook
You must comply with the academy trust handbook throughout the pre-opening period and once open. It sets out the financial management and governance requirements for academy trusts.
Non-compliance with the handbook is a breach of contract.
The handbook includes requirements on:
- financial oversight
- financial planning
- internal control
- financial monitoring and management
- the proper and regular use of public funds
- auditing
The handbook sets out that the accounting officer is personally responsible to Parliament, and to the accounting officer of DfE, for the resources under their control. This personal responsibility extends to ensuring regularity, propriety and value for money. The accounting officer also has responsibilities for:
- keeping proper financial records and accounts
- the management of opportunities and risks
Financial statements
All academy trusts with a funding agreement must submit an audited annual report and financial statements to DfE by 31 December. This includes trusts with free schools.
The academies accounts direction explains the requirements for preparing and auditing academy trusts’ annual financial statements. Before signing your funding agreement, prepare your financial statements following company law.
Trusts must set their accounting reference date to 31 August at Companies House. This is the date you will use to produce your financial statements.
Trusts must file their accounts by 31 May with Companies House.
Other financial returns
Once open, trusts must also submit the following financial returns to DfE:
- an academies budget forecast return (BFR) by the end of August
- audited financial statements for the year ending 31 August, by the following December
- internal scrutiny summary report for the year ending 31 August, by the following December
- academies accounts return academies accounts return for the year ending 31 August, by the following January
- the land and buildings collection tool as at 31 August, by the following November
- a financial management and governance self-assessment within 3 months of opening
- a School resource management self-assessment checklist by the specified annual deadline
You are responsible for keeping up to date with the latest deadlines and requirements. More information about academies financial returns is available.
Document exchange
Document exchange is a secure, online service accessible via DfE sign-in. It enables academies to receive and exchange documents with DfE.
As soon as you open it, it will add you to the document exchange. It will use your information from get information about schools.
Contact us using the Customer Help Portal if you have any queries.