The Department for Education has updated the Terms and Conditions for the 2023/24 PE and sport premium grant, refining rules around capital expenditure.

The Department for Education have altered the Terms and Conditions for the PE and sport premium for 2023/24 in a move that is perhaps likely to cause a bit of confusion across the sector.

Last year the 2022/23 conditions made it clear that the premium cannot be spent on capital expenditure, and introduced an unusual clause referring to a school's existing capitalisation policy when assessing whether proposed spending would be considered as capital expenditure. Anything above the threshold would be treated as capital, and thus would not be an eligible use of the premium. This prompted many trusts to consider increasing their capitalisation thresholds to make it easier to spend their sport premium funding. The T&Cs for 2023/24 have been expanded. They now define capital expenditure for the purposes of the sport premium grant funding as:

“The purchase of an asset (tangible or intangible), or expenditure which adds to/enhances and not merely maintains the value of an existing asset.”

The conditions also state that on occasions where the grant funds are used to maintain existing assets, this type of spending is a revenue maintenance cost. An example of re-painting lines on the playground is provided.

However, the conditions continue to refer to the need to consider your own local accounting capitalisation policy before stating that an explanation of capital expenditure is included in the associated guidance.

Core aims of the sport premium

The core aims of the sport premium are as follows:

  1. To build capacity and capability in the school and make sure that improvements made to the quality of PE, sport and physical activity provision now are sustainable and will benefit pupils joining the school in future.
  2. To develop or add to the PE, sport and physical activity that the school provides

It then goes on to reiterate that the premium cannot be used for capital spending, before giving some examples of what comes under capital expenditure,

  • multi-use games areas and Daily Mile tracks
  • Forest School environments and Trim Trails
  • buying vehicles
  • fixed playground equipment, such as climbing frames
  • trophy cabinets or similar

It continues to say that for expenditure to be treated as capital, the asset must:

  • be used for more than one year
  • be above the school's de minimis threshold for recognition of assets to its balance sheet - this can include:
    • individual assets worth over the de minimis threshold
    • grouped assets, that is assets of a similar nature that the school buys at the same time, which cost more than the de minimis threshold
    • bulked assets, for example a bulk purchase of equipment where the value of the individual item is below the set value, which cost more overall than the de minimis threshold
  • increase the useful life, performance or value of the asset

Although there have been changes to the T&Cs, they haven't fundamentally altered the pre-existing situation. This means that trusts are still not permitted to spend their sport premium funding on capital items. The principle measure is still also the trust's own capitalisation policy. However, there's a concern that the attempt to clarify the definition of capital expenditure with added details and examples may lead to more questions than answers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.