Academy Newswire

Here’s some information from the recent updates in case you haven’t had the chance to read them.

Information

Ensuring payroll and pension compliance: Why academy schools need a PAYE audit 

Introduction
In today’s educational landscape, academy schools face increasing scrutiny over financial management and compliance. Payroll and pension processes are complex, governed by strict regulations, and subject to frequent changes. HWB Accountants offers a comprehensive PAYE audit service designed specifically for academy schools, providing independent assurance that your payroll and pension systems are accurate, compliant, and robust. This could form one of your Internal Scrutiny reviews.

What is a PAYE audit?
A PAYE audit is an in-depth review of your payroll and pension processes, software, and controls. Our approach goes beyond simple transaction checks; we assess the effectiveness of your systems, identify risks, and recommend improvements. The audit provides your Board and leadership team with confidence that controls are operating as intended and that your academy is meeting its statutory obligations.

Areas covered in our audit
Our PAYE audit covers all critical aspects of payroll and pension administration, including:
Payroll scope
•    Payroll Data Accuracy: Verification of employee records, pay periods, payment frequency, and payroll dates.
•    PAYE Calculations: Review of tax codes, National Insurance (NI) calculations, and student loan deductions.
•    New Starters and Leavers: Checks on P45/P46 processing, default tax codes, and student loan types.
•    Statutory Absence and Benefits: Assessment of statutory sick pay, maternity/paternity/adoption pay, and salary sacrifice arrangements.
•    Apprenticeship Levy and Employment Allowance: Confirmation of eligibility and correct calculation.
•    Payroll Software and Controls: Evaluation of payroll system setup, working documents, and internal controls.
•    Minimum/Living Wage Compliance: Ensuring all employees are paid at least the statutory minimum.
Pension scope
•    Auto Enrolment Compliance: Review of staging dates, re-enrolment, and qualifying pension schemes.
•    Pension Contributions: Verification of employee and employer contributions, salary sacrifice arrangements, and statutory minimum rates.
•    Pension Records: Checks on documentation, opt-out processes, postponement rules, and compliance letters.
•    Pension Provider Communication: Assessment of processes for informing providers about new starters and contribution updates.
•    Tax Treatment: Ensuring correct handling for higher-rate taxpayers and net pay arrangements.

Our reporting approach
Following the audit, HWB provides a clear, actionable report structured to meet DfE requirements and support your internal governance. The report includes:
•    Summary for DfE: Concise findings and recommendations for inclusion in your annual report.
•    Detailed Observations: Specific issues, consequences, and best practice recommendations for each area reviewed.
•    Management Response Section: Space for your team to record action plans and timescales, supporting continuous improvement.

Procurement thresholds from 1 January 2026
The Procurement Act 2023 continues to reshape the public procurement landscape, and from 2026/27 the revised financial thresholds will apply when determining whether a procurement must follow the full regulated procedures. Please note that two of the thresholds decreased from the 2024 limits being the Supply, Services and Design Contracts and the Works Contracts, the Light Touch Regime threshold remained the same. The thresholds continue to be inclusive of VAT. Procurement teams will need to be more aware due to inflation and rising prices and be sure to look at the “whole life value” contract value estimation (including VAT). Please see our fact sheet for examples of how this might apply to your academy school

Reporting

Submit your Academies Accounts Return (AAR) 
The submission deadline for your AAR is on or before Wednesday 28 January 2026: your external auditor must submit this.
Make sure your external auditor is ready to submit this return and to use the Academies Accounts Return Online form. Use the DfE accounts return guidance if needed.

Regards

Michaela, Gary, James and Matt

PS if you don’t already receive the ESFA updates direct from the ESFA, you can subscribe here.

We specialise in advising business managers and bursars on the accounting, VAT and audit requirements for an Academy. 

If we don’t already act for your school or if you would like to attend our next Academy Forum (free of charge), speak to Michaela Johns, our Academies expert on 023 8046 1256. 

You can also visit www.academyvat.co.uk for guidance on V

PS if you don’t already receive the ESFA updates direct from the ESFA, you can subscribe here.

We specialise in advising business managers and bursars on the accounting, VAT and audit requirements for an Academy. 

If we don’t already act for your school or if you would like to attend our next Academy Forum (free of charge), speak to Michaela Johns, our Academies expert on 023 8046 1256. 

You can also visit www.academ

Information

FSCS deposit protection limit to rose to £120,000 from 1 December 2025

The Prudential Regulation Authority (PRA) confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit increased from £85,000 to £120,000 from the start of December.

The new threshold applied per depositor, per PRA‑authorised bank, building society or credit union. The PRA confirmed that HM Treasury had approved the change.

This was the first change to the limit since 2017 and followed a consultation earlier in the year. The PRA had initially proposed that the limit should rise to £110,000, but feedback provided in the consultation and the latest inflation data prompted a higher final figure.

Temporary High Balances Limit Also Rose
Alongside the core protection limit, the cap for Temporary High Balances (THBs) increased from £1 million to £1.4 million on 1 December.

THB protection applied to qualifying life events that could temporarily increase a customer’s account balance, such as buying or selling a house or insurance claim pay‑outs.

Implications for Your Academy Trust
The increase in limit was good news for organisations holding cash reserves to cover working capital, payroll and other running costs.

It was worth noting that the limit continued to be applied ‘per depositor, per PRA‑authorised institution’. This meant that if an organisation was eligible and held cash reserves exceeding the deposit protection limit, it could gain further protection by spreading funds across different authorised institutions.

It was also worth checking whether a banking group operated multiple brands under a single licence. This meant organisations would only receive a single protection limit for the total amounts held across those brands.

Taking a Wider Look at Cash
For many Academy Trusts, cash reserves naturally rose and fell throughout the year. Where balances regularly built up beyond what the Trust needed for day‑to‑day operations, the increase in the FSCS limit served as a useful prompt to review how much cash the Academy actually needed to hold.

Spreading funds between different banks increased the level of protection available, but it was also sensible to take a step back and consider whether those reserves were serving a useful purpose in the organisation. A simple cash flow review helped identify the amount needed for routine expenses, tax payments and any planned spending over the coming months.

Where cash consistently exceeded this level, organisations were encouraged to consider:

Are there investment opportunities for the organisation that would fit with your plans?

If you would like further information click this link.

Explore new features on Plan technology for your school

Plan technology for your school is a digital service to help schools make strategic decisions about what technology to buy and how to implement it effectively.

It is free and helps schools to self-assess their current technology set up and receive bespoke recommendations on what to improve next, why and how.

The DfE have improved functionality on the service, which means users can now:

• Return to and update recommendations, once they have acted on previous recommendations, more efficiently
• Track progress against the six core digital and technology standards, which all schools are expected to meet by 2030,more effectively
• Receive more streamlined, actionable recommendations

Based on user feedback, the DfE have also increased functionality for Multi-Academy Trusts. Multi-Academy Trusts will now be able to complete assessments on behalf of schools in their trusts.

Ensure your IT support is meeting your needs and providing value for money

The new IT support standard is the latest addition in our set of existing digital and technology standards, which support schools and colleges to understand and implement safe and reliable technology. The new standard helps schools and colleges to understand what to expect from their IT support, supports meeting digital and technology standards, and ensures value for money.

It helps schools and colleges:

• Understand what ‘good’ IT support looks like
• Set clear expectations for IT support services and understand their role in procuring and managing effective IT support
• Gain assurance in IT services they are buying and using

The standard is designed to be flexible for different school and college contexts. It positions IT support as a strategic partner in digital transformation.

Helping schools find better banking options and getting the best from your rates

The DfE have been working to help schools explore their banking options. Many schools may not have looked at their banking arrangements for years, potentially missing out on opportunities to earn better returns on their money or access services that could make financial management easier. The right banking arrangements can help schools:

• earn better interest rates on reserves and balances
• reduce administrative burden through better online services
• access specialist support that understands the education sector

In the latest buying for schools blog you can find out more about the resources to help schools explore their options, including a comparison tool to help you evaluate your current arrangements.

Santa slide for Dementia Support

On Sunday 7 December HW yvat.co.uk for guidance on VAT rules for academy schools.