October 9, 2025
The UK government has consolidated the previous R&D tax relief schemes—namely, the SME scheme and the R&D Expenditure Credit (RDEC)—into a single, unified framework. Referred to as ‘the merged scheme,’ this change aims to simplify the process, enhance compliance, and better support innovation across businesses of all sizes.
September 26, 2025
Discernment in accountancy is something that cannot be programmed. Hear from Merce Marti Queralt, Chairwoman and CEO at Kreston Iberaudit, on the power of human leadership in a digital world.
There is an increasingly widespread tendency to believe that what is old gets in the way, and that the new is the only path forward. As though experience is limited rather than enriched. Alongside this comes an almost automatic fascination with novelty.
In this climate, where newness asserts itself as a value in its own right, the way we look for answers has also changed. We live in the age of data, of algorithms, of immediacy. Everything seems to be just a click away, yet when everything is automated, the human factor becomes the real differentiator.
Having faced complex contexts, led through uncertainty and made decisions without absolute certainties, I can say that what truly makes the difference is knowing what to do with the information we have. It is knowing when to move forward, and when to pause, to reflect, to doubt, and to question it once again.
That is what we call judgment, and it is forged in practice. In hesitation. In mistakes. In the awareness that not everything urgent is important, nor everything new, better.
Today, we celebrate artificial intelligence as the great emblem of progress. And it makes sense: it processes, predicts, proposes… but the more it reads the data, the more it does not know how to interpret context. Because interpreting is not merely looking at the evidence; it is knowing when to trust it—and when to be wary of it too.
Do we want more agile and digital companies? Of course. But let us remember: agility is not haste, and technology is not wisdom.
We can rely on generative AI in accounting, but we should not forget: someone still has to decide—and that someone had better know how to discern.
The future of work is neither young nor old.
It is lucid. Demanding. Human.
And in that future, criterion is not expendable.
It is what sustains everything else.
September 5, 2025
Carried interest in Luxembourg rules are set to change following the government’s presentation of draft law n°8590 on 24 July 2025. Carried interest is the share of profits that an Alternative Investment Fund (AIF) allocates to its managers once a hurdle rate has been exceeded. The proposed regime aims to modernise tax treatment, strengthen legal certainty, and enhance Luxembourg’s attractiveness for international fund managers and investors.
The new regime would broaden the scope of beneficiaries. It would no longer be restricted to employees of management companies or AIF managers, but would also extend to individuals providing services to fund managers, including employees of external providers, independent directors, and non-employee partners.
Two types of carried interest are defined under the draft law. Contractual carried interest, based solely on contractual rights, would be classified as speculative gain and taxed at 25% of the progressive rate, resulting in an effective marginal rate of about 11.45%. Participation-linked carried interest, connected to a direct or indirect stake in the fund, would also be classified as speculative gain but could qualify for a full exemption if the participation is below 10% and held for more than six months. The exemption would cover both capital gains and distributed income, including through transparent structures.
Other important changes include making the preferential regime permanent, removing the rule that investors must first recover contributed capital before carried interest distributions, and allowing deal-by-deal structures. Beneficiaries of the current framework would automatically transition to the new regime. If adopted, the new system would take effect on 1 January 2026.
The reform is significant for Luxembourg’s alternative investment funds sector. It would provide greater clarity for managers and service providers, reduce the effective tax burden, and bring Luxembourg closer in line with international market practices. The reform also signals Luxembourg’s determination to remain a leading European hub for alternative investment funds in a competitive global environment.
The draft law is currently under parliamentary review. If passed, it will apply from 2026 and is expected to provide a clearer, more attractive framework for carried interest. For further analysis of draft law n°8590 and its implications, see Omnitrust.
August 26, 2025
July 7, 2025
June 30, 2025
The recent announcement by Kreston Global UK firm, Kreston Reeves, that it is launching new ESG advisory services highlights that strong ESG credentials remain a crucial and relevant service for the mid-market, despite recent deadline delays. The “Stop the Clock” announcement by the EU Commission in April 2025 has given mid-market firms more time to prepare, not a total veto to all obligations, explains Christina Tsiarta, Chair of the Kreston Global ESG Advisory Group.
“While for some organisations there’s a legal requirement to comply, for example in the UK, where the Department for Business and Trade just released the exposure draft of the UK Sustainability Reporting Standards, for others, it’s a matter of strategic importance and a differentiating factor in the marketplace.”
The regulatory and commercial drivers for environmental, social and governance (ESG) action are still critical for the mid-market to get out in front of. From new sustainability disclosure standards to investor and stakeholder pressure, businesses are being asked to show how they are building long-term value beyond financial returns.
Kreston Reeves, a UK member of the Kreston Global network, has launched a dedicated ESG Advisory and Reporting Service in response to this shift — a move that reflects a wider trend across the network.
“As the Chair of the Kreston Global ESG Advisory Group, I’m particularly excited to see a major firm in the network like Kreston Reeves introduce ESG advisory services,” says Christina Tsiarta. “It shows how critical ESG reporting and compliance have become for organisations of all sizes.”
While regulatory momentum continues to build, Christina believes compliance isn’t the only driver.
“Whatever the incentive, undoubtedly managing ESG issues provides an opportunity for organisations, especially mid-market ones, to grow sustainably and achieve long-term resilience.”
Kreston Reeves’ new ESG Advisory and Reporting Service is designed to help organisations embed ESG into strategic and financial planning. It offers support in four key areas:
“Strong ESG credentials are no longer a nice-to-have — they are essential to long-term success,” says Dan Firmager, ESG Adviser at Kreston Reeves. “Yet many organisations still struggle to understand and apply ESG thinking to day-to-day business decisions. Our service is designed to bridge that gap.”
The firm has partnered with ESG software provider Neoeco to deliver data-driven insights that align with financial reporting and assurance standards.
“Our ESG Advisory and Reporting Service is designed to bridge that gap, helping clients embed ESG into the heart of their operations, reporting and governance frameworks.”
Christina adds: “This is just one example of how Kreston firms are stepping up to support clients in navigating ESG demands. As expectations grow, the ability to offer clear, finance-aligned advice on ESG will become core to the trusted adviser role.”
Luxembourg’s expatriate tax regime is the latest tool in the country’s strategy to attract top international talent in an increasingly competitive global market for skilled professionals. Strategically located in the heart of Europe and known for the stability of its economic and tax environment, Luxembourg is reinforcing its position with the introduction of a new version of the regime, effective from January 2025.
This measure offers a straightforward and advantageous tax framework for professionals recruited from abroad, while addressing the needs of companies facing a shortage of specific expertise. It is a valuable tool for competitiveness in an increasingly mobile world. Aurore Calvi, Managing Director at Kreston network member OmniTrust in Luxembourg, shares her insight.
An “expatriate employee” refers to an individual hired outside Luxembourg or seconded by a foreign entity to work in Luxembourg. Unlike cross-border workers who commute daily, expatriate employees relocate and become Luxembourg tax residents.
These highly qualified profiles play a crucial role in innovation, technological development, and the competitiveness of companies in key sectors such as finance, engineering, and research.
· 50% exemption on annual gross salary, capped at €400,000 (excluding benefits in kind).
· Valid for up to 8 years, ensuring medium-term tax stability.
· Simplified administrative procedure, with no prior approval required; the employer initiates the process.
To qualify for the expatriate tax regime, several cumulative conditions must be met:
This regime is a powerful recruitment tool for attracting international talent. It allows companies based in Luxembourg (or operating there) to offer attractive net compensation packages without increasing their overall labour cost. Its simplicity is an additional benefit, especially for multinational groups used to managing complex mobility processes. It also enables them to remain competitive compared to other European jurisdictions.
| Country | Duration | Main Tax Benefit | Key Conditions |
| Luxembourg | Up to 8 years | 50% exemption on gross salary (max €400,000) | Foreign hire, must become tax resident, lived >150km away |
| France | Up to 8 years | Partial exemption on expatriation-related income | Not tax resident in France during the prior 5 years |
| Belgium | 5 + 3 years | 30% exemption via specific allowance | No residency or activity in Belgium in the past 5 years |
| Netherlands | Up to 5 years | Decreasing exemption on part of salary (30%, 20%, 10%) | Recruited from abroad |
Luxembourg stands out with a clear, generous, and easy-to-apply regime: no complex calculations, no hidden thresholds—just a transparent and straightforward exemption.
No prior approval is required, but Luxembourg’s Direct Tax Administration (ACD) may conduct audits afterwards. Employers must therefore retain all supporting documents for the full duration of the regime.
Employees already working in Luxembourg before 2025 can opt into the new regime, but this choice is irrevocable and should be considered carefully, ideally with professional tax advice.
Beyond the tax advantages, Luxembourg offers a highly favourable environment for international professionals. Located at the crossroads of Belgium, France, and Germany, it serves as a strategic base for international companies operating across European markets.
The country offers a safe, multilingual, and cosmopolitan living environment, with a workforce representing over 170 nationalities. Modern infrastructure, including international schools, facilitates family relocation. Labour laws are transparent and stable, providing reassurance to both employers and employees.
Combined with its strong economy, proximity to European institutions, and vibrant financial and tech sectors, Luxembourg presents a compelling case. The expatriate tax regime is one of several incentives, making it a highly competitive and welcoming destination.
Through this new regime, Luxembourg reinforces its role as a European hub for international talent. By combining tax incentives, administrative simplicity, and a clear legal framework, the modernised system meets the needs of companies facing growing challenges in attracting highly skilled professionals.
It forms part of a broader strategy to encourage the long-term settlement of strategic profiles and support international business development.
For companies or professionals interested in relocating to or doing business in Luxembourg or applying the expatriate tax regime, Kreston can facilitate contact with a local advisor who can assess individual situations and provide tailored guidance throughout the process.
June 25, 2025
The Kreston Charities Report 2025, released by the Kreston UK Charity Group, highlights the growing financial pressures, recruitment challenges, and political uncertainty facing UK charities. Drawing on responses from more than 2,000 organisations across the UK, the report provides vital insight into how charities are coping with rising costs, shifting government policy, and ongoing demands on their services.
This year’s findings reveal that 80% of charities are experiencing pressures on their income streams, with many also facing significant cost increases. Over the past 12 months, 92% of respondents reported wage increases, 61% faced higher energy bills, and 69% experienced increased insurance costs.
Despite these challenges, 63% of charities are exploring options to diversify income streams, such as expanding corporate giving, grants and legacy fundraising. Encouragingly, 85% believe they have the capacity to deliver their required services in 2025 – a testament to the resilience of the sector.
Almost half (44%) of charities report difficulties recruiting and retaining staff, with many increasing salaries and offering flexible or hybrid working to attract employees. However, trustee recruitment remains steadier, though 90% of charities still identify gaps in key areas such as legal, IT, and HR expertise.
While public interest in sustainability continues to rise, most charities (49%) are not increasing their focus on ESG in 2025, citing financial pressures and limited capacity. Nonetheless, many are strengthening governance, with 46% reviewing their risk registers at every board meeting and identifying reduced funding as the biggest emerging risk.
A major shift in sentiment is evident this year, with 81% of charities believing the new Labour government will have a negative impact on their operations – a stark contrast to 2024, when most expected Labour to support the sector. Despite this, 78% say they are keeping up with digital changes, and most have adequate cybersecurity measures in place.
The Kreston Charities Report 2025 highlights the UK’s charitable sector’s determination to adapt and persevere through financial and political uncertainty, continuing to deliver vital services to those most in need.
Read the full Kreston Charities Report 2025 here. If you are a charity and you would like to speak to one of our UK firms, please find your nearest UK office here.
Dr Manuel Vogel is an accomplished finance executive with extensive experience in international tax (in particular international VAT), corporate governance, and financial management. He acts as interim manager (e.g. currently the Chief Financial Officer at DentaCore AG), and is often asked to serve on the Board of Directors as a finance and tax specialist.
May 15, 2025
This is a general guide only and not designed to cover every scenario and the nuances of VAT. Specific advice according to each transaction or supply should always be sought from a VAT specialist.
April 22, 2025
What is transfer pricing?
In simple terms, transfer pricing is the process of setting the prices charged between associated enterprises in cross-border transactions, which can involve transfers of tangible goods, services, and intangible property, as well as financing transactions.
When a cross border transaction occurs between associated enterprises, tax administrations in the respective countries are especially interested to ensure that the taxable profits of multi-national enterprises (“MNEs”) are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country yield results that are consistent with the economic activity undertaken and the results that would have been realized if uncontrolled taxpayers had engaged in the same transaction under the same circumstances.
What are the rules?
Each country has different transfer pricing rules, so it is important to speak to a country tax specialist to make sure you are following local country requirements. With only a few exceptions, most countries’ transfer pricing rules are based on the “arms-length” principle, where pricing between associated enterprises should reflect the prices that would have been realized if uncontrolled taxpayers had engaged in the same transaction under the same circumstances
The OECD has also published transfer pricing guidelines (“OECD Guidelines”) here for member countries and cooperating non-member countries to follow. Most countries’ transfer pricing rules are based on the OECD Guidelines, though there may be certain differences in interpretation, application, and administration among countries.
If the transfer price is not arm’s length, the tax administrator has the authority under the tax jurisdiction regulations to make adjustments by reallocating items of gross income, deductions, credits, or allowances in order to properly reflect income between the entities.
What is an example of transfer pricing?
The following case illustrates various examples of transfer pricing related issues:
A MNE group, ValveCo, is in the business of designing, producing, and selling valves. ParentCo is responsible for design, manufacture, and distribution in its territory. SubCo1 operates as a licensed producer in its jurisdiction (Transaction 1). SubCo1 performs certain development work under the direction of ParentCo (Transaction 2). SubCo1 purchases components from ParentCo to be used in its manufacturing process (Transaction 3). SubCo1 relies on ParentCo for certain management and administrative functions (Transaction 4), as well as funding of its operations (Transaction 5). SubCo2 purchases products from ParentCo and SubCo1 for resale to third-party customers in its jurisdiction (Transaction 6).
Who do the transfer pricing rules apply to?
The transfer pricing rules are relevant to MNEs with controlled transactions among associated enterprises in different tax jurisdictions. Uncontrolled transactions do not fall under transfer pricing rules. A transaction is controlled or enterprises are associated if one enterprise participates in the management, control, or ownership of another enterprise, or if the same people or enterprise participates in the management, control, or ownership of two enterprises (i.e., a situation with common ownership).
Are there exemptions?
A growing number of countries are implementing contemporaneous transfer pricing documentation requirements, meaning the transfer pricing documentation has to be prepared prior to the filing of the tax return for a given accounting period. However, certain jurisdictions do provide documentation exemptions for small and medium-sized enterprises. In addition, a handful of other countries do not require contemporaneous documentation. While these exemptions exist, the burden of proof remains with the taxpayer to demonstrate arm’s-length pricing. This supporting information may still be requested during a transfer pricing examination, and the intercompany pricing may be adjusted by the examiner to reflect an arms-length outcome.
How do you calculate transfer pricing?
As noted above, associated enterprises should price transactions in the same way that uncontrolled entities would price the same transactions under similar circumstances. In short, the arm’s-length principle requires the comparison of controlled transactions with uncontrolled transactions. Hence, transfer prices are calculated through “comparability analysis” or benchmarking analysis. Valid comparables or benchmarks may exist as transactions between an associated enterprise and third parties (i.e., internal comparables). Alternatively, external comparables may be applied in the form of external comparable uncontrolled transactions (where none of the parties involved are members of the MNE group) or independent comparable companies that perform similar functions to one of the associated enterprises (i.e., the tested party). Our transfer pricing specialists can evaluate the specified transfer pricing methods and comparability criteria to identify the most reliable transfer pricing approach for a specific client. For external comparables, our transfer pricing specialists have access to specially licensed databases to conduct our benchmarking research. Please contact your nearest Kreston Global office to assist with your transfer pricing compliance needs.
Is transfer pricing tax evasion?
The objective of transfer pricing rules is to prevent MNEs from arbitrarily shifting income to avoid paying taxes. According to the OECD Guidelines, the consideration of transfer pricing should not be confused with the consideration of problems of tax fraud or tax avoidance, even though transfer pricing policies may be used for such purposes. Application of transfer pricing in accordance with the arm’s-length principle and the preparation of supporting documentation is considered to maintain tax compliance and good practice; failure to do so may result in income adjustments, potential double taxation, interest, and penalties.
How can Kreston Global help my company with transfer pricing?
Kreston firms can help support your company to adhere to country-based transfer pricing rules with the following core services:
Please search for your nearest Kreston Global office here and they can help signpost you to the countries you need support in.
April 11, 2025
Kreston Reeves has carried out tax due diligence and advised the manufacturing business Hydraflex on its acquisition of Hydralectric International and its European subsidiaries in France and Slovenia.
Established in 1989, Hydraflex is a world leading manufacturer of high-quality speciality metal and braided hoses used across a wide range of building and manufacturing processes.
Hydralectric makes bespoke hoses and high-performance valves for the water industry. The acquisition will see both companies expand their manufacturing and distribution capabilities across Europe.
Kreston Reeves advised Hydraflex on the tax due diligence for the acquisition, working alongside Kreston Global member firm Groupe Conseil Union in France and the Slovenian accountants Simič & partnerji d.o.o.
The Kreston Reeves team was led by Senior Partner Andrew Griggs and supported by Mohammed Mujtaba (Corporate Tax), Amar Iqbal (Corporation Tax), Tanraj Bansal (VAT) and Tom Boniface (Private Client Tax).
Andrew Griggs said: “Mohammad and I are delighted to have worked alongside Hydraflex and colleagues in France and Slovenia on this deal. We are seeing an increase in cross-border corporate finance transactions, and as part of the Kreston Global network we are well-placed to work with businesses wherever they may be located.”
Duncan MacBain, CEO and founder of Hydraflex said: “This is an important acquisition for Hydraflex and Hydralectric International, significantly building our international reach.
“We are grateful to the teams at Kreston Reeves for the first-class support Andrew, Mohammed and their colleagues provided in the UK and through their partner firms in France and Slovenia. Their advice was on-point, ensuring the deal progressed quickly and efficiently.”
Addleshaw Goddard provided Hydraflex with legal advice with Sentio Partners providing corporate finance support.
March 17, 2025
March 14, 2025
Interpreneur data conducted by Kreston seems to show a weakening resolve in Europe to prioritise ESG in business operations. But this data does not tell the full story. Kreston Global is finding that while clients are juggling a lot of issues, ESG is still gaining momentum.
As growth in the global economy begins to decline, clients have a lot of issues to grapple with, issues that they may not have even considered four years ago. But European clients are not pulling back from ESG.
‘In 2023 and into early 2024, sustainable funds in Europe experienced strong inflows, outpacing those in the United States, where ESG investing has become more politicised and faced withdrawals,’ said Carmen Cojocaru, Managing Partner at Kreston Romania. ‘Europe remains a front-runner in adopting sustainable funds, with substantial investment increases, including nearly USD 11 billion in new assets for the first quarter of 2024 alone, more than doubling previous quarter inflows. This suggests not a reduction, but growing enthusiasm and development in ESG. It seems the reported weakening may be more reflective of regional differences, rather than a true decline in Europe.’
ESG adoption has suffered in the US, where it is seen as an issue that has become too politicised and too controversial, but Europe seems to be sidestepping this problem. While ESG issues have always been used in political agendas, in the EU, ESG is not seen solely as a political issue or as a topic with political connotations. If anything, EU discussion surrounding ESG centers around legal and licensing requirements, value chain requests or stakeholder pressures.
‘For example, if the company is large and within the scope of relevant legislation, then for them ESG is a legal requirement,’ said Christina Tsiarta, Head of Advisory Services on Sustainability, ESG & Climate Change at Kreston ITH, and Kreston Global ESG Advisory Group Chair. ‘If the company is an SME, it’s seen as an area that needs to be tackled because of other drivers. In our experience, clients are increasingly understanding how important ESG issues are to manage as an organisation, and taking more and more relevant action beyond just legal compliance.’
There has been some noise that increased EU regulation around areas such as data security is forcing ESG further down the list of priorities but Cojocaru and Tsiarta agree that data security and ESG are complimentary to each other.
‘While stricter EU regulations such as GDPR have elevated the importance of data security, they do not overshadow the significance of ESG,’ said Cojocaru. ‘These regulations highlight the need for secure and transparent operations, affecting the scrutiny of ESG-related data. Both issues are equally essential and should be addressed in tandem.’
Some of the buzz surrounding the topic of ESG might have died down, which could, Tsiarta said, be perceived as softening in the market, but ESG is definitely here to stay. Banks in the EU are now requiring information on ESG to issue certificates of performance for clients, which influence their lending and investment decisions and the terms of engagement. Investors are increasingly requesting information on the ESG performance of companies for their decision-making. Legislation such as the CSRD has expanded the scope of companies that need to report and has introduced a requirement for third-party assurance of reporting. SMEs and SMPs are already facing ESG requests from their value chain and they are in scope of some existing and of upcoming ESG-related legislation.
All in all, reports of the death of ESG have been greatly exaggerated. ‘Accountancy firms that have invested heavily in meeting client demand on ESG actually need to be expanding their ESG strategy,’ said Tsiarta. ‘There are many drivers pushing companies to improve their performance on ESG, and new business lines are now opening up for accountancy firms as a result.’
As well as new revenue streams opening up, AI is busy making the traditional offerings obsolete. ESG is one of the main areas of upskilling that companies need to invest in.
Cojocaru is finding that in Europe, companies are doubling down on ESG by investing in industry professionals, especially within accounting firms. ‘Accountancy firms, in particular, stand to benefit from reinforcing ESG principles as they align operations with rigorous standards like the EU’s Taxonomy and the Sustainable Finance Disclosure Regulation,’ she said. ‘This strategic focus not only adheres to regulatory frameworks but also responds to the significant investor demand for sustainable investments.’
While the headlines may have indicated that US firms are running for the hills when it comes to ESG, Chuka Umunna, JPMorgan’s global head of sustainable solutions, told the Reuters Energy Transition conference in London recently that US firms are still moving money in a way that is similar to European ones. The pressure to meet exacting ESG standards is a long way from being eased.
February 18, 2025
The latest Kreston UK Academies Benchmark Report 2025 reveals a worsening financial outlook for academy trusts, with cost pressures continuing to outpace income for a second consecutive year.
The percentage of trusts reporting in-year financial deficits has tripled since 2021, rising from under 20% in 2020/21 to nearly 60% in 2023/24. This means around three in five academy trusts—responsible for more than 10,000 schools across England—are struggling to balance their budgets.
One of the biggest financial challenges facing trusts is the rising cost of teaching and support staff, cited by 81% of respondents. A key issue is that government funding for teachers’ pay has failed to keep pace with increasing costs. Demand for special educational needs and disabilities (SEND) provision is also adding to the financial strain, with significant budget deficits making it harder to provide essential support.
Smaller trusts are particularly vulnerable. In single academy trusts, staff costs have exceeded 75% of revenue income for the first time since 2022, impacting both primary and secondary schools.
Kevin Connor, head of academies at Bishop Fleming, warns that many trusts are heading towards a financial cliff edge. “Rising costs, including national insurance, teacher pay increases, and minimum wage adjustments, are not being fully covered by government funding. The number of pupils with Education, Health and Care Plans (EHCPs) has grown, but many trusts have had to absorb these costs themselves. Without urgent action, this could become an unsustainable financial burden on the sector.”
Financial reserves, which act as a safety net for trusts, are rapidly depleting. More trusts have been forced to dip into their reserves, with 31% now holding less than 5% of income in reserves—a threshold considered a sign of financial vulnerability by the Education and Skills Funding Agency. This figure has increased from 17% in 2022.
While multi-academy trusts (MATs) have, on average, maintained surpluses, these have declined sharply. Smaller trusts saw average surpluses fall from £203,000 in 2022 to just £1,000 in 2023/24. Larger MATs reported an average surplus of £99,000, compared to £1.56 million the previous year. The report reveals an overall net deficit of £8 million in free reserves across trusts for 2023/24.
David Butler, executive author of the report and partner at Bishop Fleming, says this trend is concerning. “Trust reserves are heading in the wrong direction. With cost pressures continuing to mount, there’s a real risk that smaller trusts could run out of money entirely.”
Nick Cross, CEO of King’s Group Academies, adds, “Reserves should be used for unexpected emergencies or investment in improving education. But too many trusts are having to rely on them just to keep schools running, which is not sustainable.”
Financial constraints are also limiting the expansion of trusts. The removal of the Trust Capacity Fund, which provided financial support for trusts taking on additional schools, has slowed growth, with more than half of trusts expecting to scale back expansion in 2024/25.
Size plays a key role in financial resilience, with over 60% of large MATs confident in their financial stability, compared to less than 50% of smaller trusts.
David Butler notes, “Rising costs and political uncertainty have put the brakes on growth in the sector. Larger trusts tend to be in a stronger financial position due to economies of scale. Many trusts are now weighing the financial risks before deciding whether to expand.”
Hannah Dell, chief operating officer at Gloucestershire Learning Alliance, says financial challenges are making it harder for trusts to take on new schools. “Many schools looking to join a trust are already facing deficits. We’ve had to reassess our growth strategy to ensure new schools are financially viable before they join us.”
Funding constraints are also making it harder for trusts to invest in school buildings and infrastructure. To maximise funding from the Condition Improvement Fund (CIF), trusts must contribute 30% of project costs—something that is increasingly difficult with shrinking reserves.
Many trusts are now diverting funds from already limited reserves to cover essential maintenance and repairs. This issue is particularly acute for single academy trusts, where capital income has fallen by 90% to less than £50 per pupil since 2022.
Kevin Connor highlights the challenge this presents. “There’s simply no financial flexibility to invest in major capital projects such as refurbishing classrooms or upgrading facilities.”
Despite the financial strain, the report highlights some areas of resilience within the sector. Some trusts have successfully increased investment income by securing more favourable banking interest rates, with a few generating over £1 million in additional revenue in 2023/24.
Energy costs have also become less of a concern, with only 12% of trusts listing heating and electricity as a top financial pressure. This is due to falling energy prices and ongoing efforts to reduce carbon footprints.
Other key findings from the report include:
The Kreston UK Academies Benchmark Report is an annual financial survey of 260 academy trusts, representing almost 2,300 schools across England.
To download the full Kreston Academies Benchmark Report 2025, click here.
February 11, 2025
January 27, 2025
