Changes to Leasing for Schools “The IFRS16 Maintained Schools Finance Lease Class Consent 2024”
From 1st April 2024 Local Authority Maintained schools will adopt a new accounting standard, in line with the wider Public Sector, known as IFRS 16. The new accounting standard will see changes to the way that leases are accounted for. Up until now all schools have been prohibited from borrowing and so have only been able to enter into Operating Leases. The new Class Consent identifies specific items of equipment that schools are still able to procure through leasing, but gives greater flexibility on the leasing structure, with schools now being able to use Finance Leases.
The Class Consent covers:
1. All existing leases in place on 1 April 2024 for items included in this list
2. 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)
3. Leases related to telephony (for example mobile phones, landline phones and telephone systems)
4. 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)
5. Leases related to furniture (for example desks, tables and chairs)
6. Leases related to bathroom and sanitary items (for example hand dryers, towel dispensers, sanitary bins)
7. Leases related to gym equipment (for example treadmills, free weights and weight machines, rowing machines and exercise bikes)
8. Leases related to grounds keeping equipment (for example lawn mowers, string trimmers, leaf blowers and salt spreaders)
9. Leases related to LED lighting system (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
10. Leases related to minibuses and other vehicles for the use of the school
11. Leases related to temporary classrooms and equivalent structures
Equipment not included on the above list will require Secretary of State for Education approval. Academies will not be implementing IFRS 16, so will still account for Operating Leases, however from the 1st September 2024 they will also be able to enter into Finance Leases for defined equipment.
The changes through the adoption of IFRS 16 will mean that all leases will be brought on balance sheet and there will be no distinction between an Operating Lease or a Finance Lease. The only exception to this are low value individual items (typically under £5,000 each), or contracts that are short term (less than 12 months).
For further information or to discuss your funding requirements please do not hesitate to contact us.