Spotlight for 2026 to 2027
Details of the key areas we would like to highlight.
Changed accounting for leases
The introduction of IFRS16 for local authorities from 1 April 2024 ends the distinction between operating and finance leases at maintained schools for accounting purposes. All leases will now count in principle as capital, unless the total value of the lease is below the local capitalisation threshold.
All leases will be classed as borrowing and will require the Secretary of State for Education’s consent. The Secretary of State has however agreed to provide blanket consent to a range of the most common leasing activities, as set out in the IFRS16 Maintained Schools Finance Lease Class Consent 2024. Leases not included in this Order will still require the written consent of the Secretary of State.
Where a lease counts as capital, it must not be included in the revenue expenditure lines E12 to E25. Instead, it must be included in E30 as direct revenue financing of capital. The same sum will appear in CI04, and the expenditure will then be recorded in CE01 to CE04 as appropriate.