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Notable updates include those on executive pay and cyber ransomware demands.
The Department for Education has published the 2025 edition of the Academy Trust Handbook (the 2025 Handbook), which came into effect on 1 September 2025. While many of the core expectations remain unchanged, there are several notable updates that academy trust leaders should be aware of.
You can access the updated handbook here: Academy trust handbook - GOV.UK.
New and updated guidance
The 2025 Handbook includes new references and links to external guidance in a number of areas. These include:
- Sustainability and climate action planning – including developing and reporting on trust-level strategies;
- Estates management – covering planning, maintenance and capital projects;
- Procurement – with references to the Find a Tender service and the Buying for Schools initiative; and
- Financial support and oversight – now provided directly by the Department for Education (DfE), following the closure of the Education and Skills Funding Agency (ESFA).
While not all of this guidance is mandatory, its inclusion reflects growing expectations in these areas and trust leaders should ensure they are familiar with the updated materials available via the links in the 2025 Handbook.
Accounting Officer responsibilities
The Handbook provides further clarification of the role and responsibilities of the Accounting Officer.
This includes clearer definitions of the principles of regularity, propriety, feasibility and value for money, mirroring definitions in HM Treasury's Managing Public Money guidance. The duty of the Accounting Officer to raise concerns where appropriate regarding these principles is also reiterated.
These updates highlight that the financial compliance principles governing academy trusts are the same as those in the public sector more broadly.
Executive pay
There are two key additions in relation to executive pay. First, there is a clear statement that the DfE may now challenge decisions on executive pay, and not solely in the context of poor financial management by the trust. Secondly, trusts must have an agreed and documented pay policy covering executive pay.
As before, trust boards must ensure that their pay decisions are transparent, proportionate and justifiable. The 2025 Handbook adds that such decisions must also be "defensible".
Audit thresholds
The updated handbook reiterates the mandatory requirements for academy trusts with an annual revenue income over £50 million to establish an audit and risk committee and to deliver internal scrutiny using either an in-house internal auditor or a bought-in internal audit service. The 2025 Handbook clarifies that this income threshold is based on the trust's last audited accounts.
Repercussive transactions
The 2025 Handbook restates that novel, contentious or repercussive transactions must always be referred to the DfE for approval before the transaction is agreed and before it takes place.
A fuller definition is now provided of transactions that are considered "repercussive". These are now defined as transactions "likely to set a precedent and cause pressure on other trusts or the broader public sector to take a similar approach and hence have wider financial implications, including where a trust's proposal could cause additional costs to arise for other parts of government".
This might apply to transactions which will have a short or medium term positive financial impact on the academy trust involved, but will have longer term consequences for the public purse if other trusts follow suit (for example in relation to pay and pensions).
Cybersecurity and ransomware
A significant change in the 2025 Handbook is the instruction that ransomware demands must not be paid under any circumstances. Previous guidance permitted exceptions with ESFA approval, but this has now been removed. Trusts should ensure that internal ransomware response protocols are aligned with this position.
Notices to Improve
The criteria for issuing a Notice to Improve on governance grounds have been narrowed. The Notice of Improve criterion where trustees lack "the skills, knowledge and experience to exercise effective oversight of the trust's operations and performance, including educational performance" has been removed. While this reduces the scope for intervention on governance capability grounds, boards are still expected to ensure that oversight remains robust and effective.
Recovery of funds
The DfE's powers to recover funds where there is evidence of irregularity or fraud are now explicitly stated in the 2025 Handbook. Trusts should continue to maintain strong financial controls and appropriate audit trails.
Next steps
While the number of changes introduced in the 2025 Handbook is relatively modest, academy trust leaders are encouraged to:
- Review and update relevant policies, particularly those relating to executive pay and cyber security;
- Ensure trustees and senior leaders are familiar with the 2025 Handbook; and
- Revisit risk registers and governance frameworks in light of the updated expectations.
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.
