The ESFA has recently published upcoming changes which impact how academy schools enter into leasing arrangements from 1 September 2024.
There are two types of leasing arrangements, operating leases and finance leases. Finance leases are a form of borrowing and therefore up to this point under the Academy Trust Handbook have required Secretary of State approval before being entered into.
From 1 September 2024, whilst academy Trusts still need to distinguish between operating leases and finance leases for financial reporting purposes, there is a list of assets for which The Secretary of State for Education has granted prior consent for academy trusts to lease under either operating or finance leases.
Although entering into finance lease arrangements for these assets will be permitted following these changes, Trusts still need to consider whether they are achieving value for money.
The following assets have been granted prior consent by the Secretary of State for Education:
- all existing leases in place before 1 September 2024 for items included in this list
- leases related to IT equipment (for example, laptops, tablets, desktop computers, printers, photocopiers, servers, door entry security systems, CCTV Systems, whiteboards and touch screen boards)
- leases related to telephony (for example, mobile phones, landline phones and telephone systems)
- leases related to catering and cleaning equipment (for example, tills, water coolers, vending machines, dishwashers, washing machines, ovens, fridges, freezers, water boilers, small kitchen appliances, crockery and cutlery)
- leases related to furniture (for example, desks, tables and chairs)
- leases related to bathroom and sanitary items (for example, hand dryers, towel dispensers, sanitary bins)
- leases related to gym equipment (for example, treadmills, free weights and weight machines, rowing machines and exercise bikes)
- leases related to groundskeeping equipment (for example, lawnmowers, string trimmers, leaf blowers and salt spreaders)
- leases related to LED lighting systems or to support renewable activity (for example, lightbulbs, control mechanisms and control panels) - consent is granted where the product has been sourced with support from the Department for Education through Get help buying for schools or from a recommended route on our Find a framework website
- leases related to minibuses and other vehicles for the use of the school
- leases related to temporary classrooms and equivalent structures (but not land leases they sit on, which may require separate consent – see school land transactions guidance)
The next step
If you have any questions regarding the changes to leasing agreements, please contact Jack Wilkinson on jack.wilkinson@uhy-uk.com or your usual UHY adviser.
