The latest Kreston Academies Benchmark Report has been released. It shows escalating anxieties among academy trusts regarding the future of their financial health.
UK - The 10th annual academy report is out now. The survey includes data from 300 trusts representing over 1,500 schools and is a collaboration between 8 UK-based Kreston firms.
The Charities and Non-Profit sector is facing complex problems across the globe. Issues relating to funding and recruitment have stunted […]
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Kreston UK Academies Benchmark Report 2024 published
February 6, 2024
The recently published Kreston UK Academies Benchmark Report 2024 reveals critical insights into the financial health of the academy sector. This comprehensive study shows a significant shift towards financial instability, with a marked increase in academies resorting to their reserves amid rising costs.
In the financial year ending 2023, the proportion of trusts operating at an in-year deficit—spending more than their allocated revenue—has alarmingly doubled since 2021, from 19% to 47%. This uptick underscores the growing financial pressures on the sector, particularly due to non-staffing costs which have surged by 16% per pupil, significantly influenced by a minimum 49% rise in energy costs per pupil.
Mainstream Schools Additional Grant (MSAG) and the Schools Supplementary Grant (SSG)
Despite these challenges, the sector has shown resilience, performing better than anticipated thanks to effective cost management strategies and unexpected government funding, including the Mainstream Schools Additional Grant (MSAG) and the Schools Supplementary Grant (SSG), alongside £447 million in Energy Efficiency Grants. These measures have provided essential support, preventing many trusts from slipping into deficit.
However, the persistent uncertainty around future funding and income streams has heavily impacted the sector’s ability to make long-term financial decisions, leading to a cautious approach towards investment and expansion. The report highlights the importance of strategic planning and calls for a fair per-pupil settlement that considers the sector’s unique needs.
Reserves pooling
Additionally, the trend towards income and reserves pooling among multi-academy trusts (MATs) continues to grow, demonstrating a strategic approach to financial management aimed at improving educational outcomes across trusts.
This year’s findings indicate a slowing in MAT growth, reflecting the sector’s cautious stance in an uncertain financial landscape. Staffing costs remain a concern, with a slight decrease in their proportion of total costs, yet the sector calls for additional funding to sustain high-quality education and meet the economy’s needs.
Get in touch
For in-depth insights and detailed analysis of the financial state of the UK academy sector, we encourage readers to download the full Kreston UK Academies Benchmark Report. This report is invaluable for anyone involved in or interested in the financial dynamics of educational institutions. To learn more about the report and Kreston UK, visit Bishop Fleming’s website.
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Meera Rajah
Partner (VAT & Duty) and Head of South East Asia Business at James Cowper Kreston
Meera Rajah heads up James Cowper Kreston’s VAT services and leads their expansion into South East Asia. She has developed extensive technical knowledge over more than 20 years specialising in VAT and adopts a practical approach that has successfully argued against HMRC to achieve substantial VAT savings and compensation for clients.
Her experience is comprehensive, encompassing business restructuring (mergers and acquisitions), VAT cost reduction strategies, international cross-border supply chains, partial exemption methods, land and property transactions, film production, charities, and VAT planning and mitigation. Additionally, Meera assists businesses in disputes with HMRC, drawing on her years of valuable experience from previous roles within the organisation. Her background with HM Revenue and Customs has equipped her with a range of skills and expertise in inspections and negotiations, greatly benefiting her clients.
Labour’s plan to remove VAT exemption from independent school fees
November 3, 2023
The UK’s Labour Party has proposed the removal of VAT exemption from independent school fees. This potential update is examined in a recent article by Meera Rajah, partner at James Cowper Kreston. Read the full article here, or the summary below.
Labour’s proposal to remove VAT exemption from school fees
The Labour Party, aiming for office in the next general election, plans to withdraw the ‘eligible body’ status from independent schools, which would consequently subject school fees to the standard VAT rate. This change could see an increase in fees, although not necessarily by the full 20%, due to improved VAT recovery on costs for schools.
Impact on independent schools and fee structures
Independent schools currently face significant restrictions on VAT recovery, which would be alleviated should this proposal come into effect, potentially reducing net school costs. However, the implementation of these changes could be as far off as 2026 or later, and schools are advised to prepare for this possible shift.
Strategic financial planning for schools after the lifting of VAT exemption from school fees
The article also explores strategic financial planning in anticipation of these changes, such as the timing of fee payments. Prepayment options may offer a method to circumvent immediate VAT charges, providing a compelling incentive for parents.
The complexities of VAT recovery for educational institutions
The ramifications of the proposal extend beyond fee adjustments, with the possibility of increased VAT recovery from major capital expenditures, thanks to the Capital Goods Scheme. It’s a nuanced forecast that requires careful consideration by school leaders, who must remain vigilant for updates and guidance on the matter.
Preparing for potential changes in UK VAT legislation
The full implications of the Labour Party’s potential policy shift, including the calculated £1.7 billion in additional tax revenues and improved VAT recovery for schools, are detailed in the full article. Independent schools and stakeholders are encouraged to read the complete analysis at James Cowper Kreston’s website to prepare for the potential financial landscape ahead
If you would like to talk to someone about the tax on independent school fees, please get in touch.
News
Kreston Charities Report reveals uncertain future for UK charities
March 7, 2023
The Kreston Charities Report 2023, released by the Kreston UK Charity Group, has revealed that UK charities are facing an uncertain economic outlook, challenging recruitment, and fundamental issues such as a lack of diversity at board level. The report provides important insight into the experiences of a wide range of charities across the UK, with Duncan & Toplis contributing significantly to the report.
Charities are feeling the pinch, with a large majority seeing costs rise over the past 12 months due to soaring energy bills and a steep hike in inflation. This, combined with limited financial resources and challenges in recruitment efforts, has left many charities facing an uncertain future. However, 73% of charities consider their financial reserves to be sufficient to cover future development plans and contingencies for increased costs or reduced income.
Recruitment has become more challenging for charities, with rising costs and limited financial resources making it difficult to offer competitive salaries. To overcome this, charities are looking to offer non-financial rewards to entice new recruits and retain existing employees.
Charity board diversity
The report also highlights fundamental issues such as a lack of diversity at board level, which is a major worry for the charities surveyed. 72% of charities are concerned about the lack of diversity among their Board of Trustees. Mental health support for staff/volunteers has become increasingly important, with 82% of charities stating that their beneficiaries are more affected by mental health now than they were before the pandemic.
Charities and cybersecurity
Despite the challenges, the report also shows that charities are on the whole well-equipped to deal with cybersecurity, and environmental issues are increasingly important, with half of the charities addressing climate concerns despite them not being part of their objectives.
The Kreston Charities Report 2023 provides important insights into the challenges and opportunities facing UK charities and highlights the need for charities to address fundamental issues such as diversity and mental health support.
If you would are a charity and you would like to speak to one of our UK firms, please find your nearest UK office here.
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Kreston Global welcomes new member firm in Croatia
February 24, 2023
Kreston Global has welcomed new member firm Kreston Croatia (formerly LID Revizija) to the Kreston network. The firm, which was created in June 2022 and is based in Zagreb was founded by Managing Partner Ivan Pecur, who has worked in a number of international accountancy organisations including Grant Thornton and Crowe over the last 16 years as an Audit partner, the firm also comprises 2 other partners, Luka Orlović and Domagoj Bakran. Together they offer a mix of audit, accounting and tax services to businesses across Croatia, and in particular service clients in the ICT, Tourism and Leisure, Energy, FMCG/Retail, Production and Not-for-Profit sectors.
Ivan Pecur, Managing Partner at Kreston Croatia said: “Joining the Kreston network is a great opportunity for us to really help our clients to grow. The international reach across Europe and the world the network offers is of great interest to us and we are keen to become involved in the regional and global opportunities for collaboration it offers.”
Liza Robbins, Chief Executive of Kreston Global, said: “Kreston is really pleased to welcome our new Croatian firm which will be a great asset to our highly energetic Eastern European firms. We know many of our members have clients who are interested in this part of the world and having Kreston Croatia able to help and support them is a great advantage. We are looking forward to helping them connect with our members across the network.”
The Kreston Academies Benchmark Report shows escalating anxieties among academy trusts regarding the future of their financial health. Although there are considerable surpluses in the sector, per-student income has increased by a mere 1% against inflation rates of over 10%, higher energy costs, and teacher pay increases. Consequently, 88% of trusts anticipate future decreases in surpluses and reserves.
Kreston Academies Benchmark highlights include:
The sector’s financial surpluses are lower than in the previous record-breaking year. However, a substantial number of single academy trusts (SATs) in the primary sector (47%) reported deficits for 2021/22, indicating that larger trusts have tremendous fiscal success.
This is the first time primary SATs have seen average in-year deficits in four years. This is due to a few primary SATs with huge deficits caused by capital and maintenance expenditures that pulled down the overall average.
The Office of National Statistics (ONS) has reported a 30% rise in capital spending compared to 2022. This is due to a predicted drop of at least 12% in primary and nursery school attendees in the next 6 years, resulting in a 7.4% decrease in MAT revenue reserves per pupil from £802 to £743. Despite this, larger trusts with more than 7,500 pupils still achieve surpluses similar to 2021. 70% of MATs expect growth by 2023/24, with 5% expecting growth of 7+ schools for both 2023 and 2024.
There was a noticeable decrease in grant funding for academies that moved trust in 2021/22, with only 23% receiving it compared to 63% back in 2014/15. The total level of funding was £1.73m, significantly lower than the £3.16m seen last year.
If you are interested in the Kreston Academies Benchmark Report, have a UK-based academy trust, and would like accounting advice and support, please get in touch with one of our members here.
The two new members are now both group leaders in their e-teams, Kreston Egypt now specialising in individuals moving in or out of Cairo and McLean Delmo Bentleys now responsible for the same in Melbourne.
The two firms are working with our two global mobility partners; Expatland, who co-ordinate the e-teams all around the world, offering one-stop service, organising everything from expatriate tax to finding a school, for their clients. andHarmony Relocation, a global relocation expert.
If you are moving abroad or looking to move staff overseas, the Kreston Global mobility network can offer tax advice and co-ordinate all other services, from organising a visa to moving your house contents to another country.
Learn more about our network and how we can help you and your employees move country.
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10th annual Kreston Academies Benchmark Report
January 28, 2022
UK – Each year, a team of Kreston Global UK firms work together to produce an annual benchmark academy report. The survey includes data from 300 trusts representing over 1,500 schools and covers the 2020/21 academic year. This year is the 10th year of reporting, which was a collaboration between Bishop Fleming, Duncan and Toplis, Mitchell Charlesworth, BHP, Clive Owen LLP, Kreston Reeves and James Cowper Kreston.
Highlights of the report include
The average in-year financial surplus for a multi-academy trust (MAT) doubled to more than £460k in 2021 up from £221k in 2020. This comes from reduced costs and government funding during Covid. The money will now be invested in improving the education and well-being of pupils, post-Covid.
Staff costs across all schools have stayed static, with secondary staff costs rising for the 9th year in a row due to a skills shortage, particularly for learning support staff and supply cover. Nearly 65% of trusts reported expected growth in 2022/23.
Just 14% of trusts are confident their surplus would remain the same for the next 3 years.
97% of trusts are now partly or fully centralised, opting to have one centre for services such as HR, finances and estates.
The percentage of academy trusts pooling funding centrally and distributing it due to individual school needs has risen from 11% in 2020 to 14% in 2021.
If you have a UK-based academy trust and would like accounting advice and support, please contact one of our members here.
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Charities COVID-19 Survey Report
August 9, 2021
Our UK Charities group have published a recent survey looking at the impact of Covid on the sector, and what the outlook is for charities and not-for-profit as we move into what looks like a more positive phase in 2022 and beyond. Whereas some parts of the sector were very badly affected, others saw revenues hold steady and even increase as the general public’s awareness of their contribution increased during the pandemic.
67% of the arts, culture and sports charities reported a reduction in income, as did the private education sector who saw both a reduction in income and costs increasing as a result of additional PPE, cleaning costs and remote working technology. Remaining organisations’ income remaining steady, with 53% of charities seeing an increase in demand during the pandemic, and just 20% reporting a fall. More than 95% of respondents consider their charity to have been financially resilient during the pandemic, and almost 80% are happy with their current reserves levels. Going forward, over 70% expect an increase in demand from beneficiaries, with 30% anticipating a significant increase. 97% however feel they will be able to survive for the next 12 months.
Unsurprisingly, technology has played a large part in service provision, with 57% providing more services online.
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Charities, not-for-profit and education
June 30, 2021
The Charities and Non-Profit sector is facing complex problems across the globe. Issues relating to funding and recruitment have stunted the growth of many, reducing their outreach and preventing them from fulfilling their full potential. Optimising your financial processes, attaining tax efficiency and adapting your organisation’s structure and procedures can all strengthen your business building essential resilience.
Kreston Global’s network of experts have upheld our tradition of providing leading advice and services for charities, not-for-profits and the educational sector. Across our global teams we have experience in providing essential services that help to streamline operations, reducing costs as well as ensuring regulatory compliance. Our financial solutions are tailored specifically to your organisation, providing a personal service, with global insights.
Financial consultancy for charities, not-for-profit and education businesses
Kreston Global’s partner firms are equipped to provide a full range of financial consultancy services for organisations within the charities and education sector. From the information gathering stages of auditing to the implementation of strategic planning, our expert teams can guide not-for-profit businesses through a variety of financial states and transitions.
Whether you are seeking to expand as a business into a new market or across borders for a broader global reach, our partners are equipped to support your company at any point of its journey. Understanding the unique challenges faced within this sector, we provide specialist guidance on tax relief, budget planning and business structuring, helping you to fulfil your charity’s mission statement to its fullest extent avoiding income loss and securing the future of your organisation.
Auditing and reporting
Kreston Global’s specialists are equipped to perform full audits of your organisation’s records, giving the clearest picture of your structure and financial state. Through this process our experts provide improved financial reporting systems, enabling your business to better comply with regulations and undertake more effective financial planning and strategy.
Forecasts and budgets
At Kreston Global, the broad reach of our firms and our global outlook on financial services fuels our curiosity and culture of research. As we regularly conduct research into the sector at large, our firms are all supplied with the latest developments in the charity and education sector, enabling them to best advise on financial planning and structuring for the future of your business. Accurate forecasting and considerations of sector transformations fulfil our commitment to efficient and effective budgeting for the charity sector.
Charity VAT advice
Ensuring full VAT compliance as a charity or educational institution can be achieved through collaboration with a Kreston Global firm. Our teams work worldwide to provide the most up to date and accurate advice on tax regulation and compliance within their local country as well as globally as your organisation grows.
Charitable trading subsidiaries and trading issues
For charities who are engaged in trading, our teams provide guidance on whether their trading practices fall under intranational tax regulations. Should taxation be applied to your trading our teams can advise on strategies to mitigate impact through forming charitable trading subsidiaries.
Governance and best practices
Our consulting teams are equipped with our rich research into the charities sector, providing invaluable insight into best practices across the sector, allowing your governance to reflect the values of your organisation whilst also effectively leading you through transitions. With firms across the globe, our organisation has worked with a variety of organisations giving us insight into the broad range of business structures found across the charities sector.
Obtaining tax-efficient funding
Access to funding has become an increasing challenge for organisations across the charities, not-for-profit and education sector.Our teams enable your organisation to identify effective funding strategies, allowing for strong financial planning and forecasting. Alongside these services, we seek to explore and implement tax-efficiency across your organisation allowing you to invest your funding into the change you seek to make.
Overseeing mergers, joint ventures and partnering structures
An effective growth and transformative strategy can secure the strength and longevity of a charitable organisation, equally providing an option for those who are feeling the pressures facing the sector today. Kreston Global’s experts are adept in handling the initial prospecting, management and implementation of mergers, joint ventures and partnerships within the charities sector. The intricacies of combining forces are handled with ease by our teams of professionals through accurate data collection of your organisation’s finances and effective synthesis and strategy through a merger.
Strategic planning
Identifying areas of strength and weakness can be crucial for the future prospects of a business in the charities and education sector. Our business strategy teams can work with you to review the goals and benchmarks of your organisation in context with an audit of strengths and weaknesses in order to consider future opportunities and threats to your current business model. We can advise on seeking outsourcing of certain procedures as well as implementing digital solutions for greater efficiency and accuracy, further strengthening the possibilities of future planning for your organisation.
What are Kreston Global’s professional standards in the charities, not-for-profit and education space?
Kreston Global’s member firms comply with the local professional standards of their respective countries as well as adhering to strict international regulations. Through our internal monitoring programme we ensure that all our partners meet the International Standards on Quality Control as well as the International Standards on Auditing for the conduct of transnational audits. All of our teams follow the code of ethics as dictated by the IESBA (International Ethics Standards Board for Accountants).
As a proud member of the Forum of Firms, an association of international networks of accounting firms, Kreston Global is committed to meeting high standards in financial reporting and auditing practices across our worldwide community.
Our expert teams understand the landscape of the charities and education sector in detail locally and globally, ensuring that our consultancy is consistently accurate and primed for growth.
Wherever you are in the world, wherever your organisation provides its services, you can trust our standards to be universally met and exacting.
Why choose Kreston Global’s charities, not-for-profit and education financial services?
With a rich understanding of the charities and educational sector as a whole, Kreston Global’s partners provide unparalleled services to organisations in this sector. In order to respond to the challenges facing the sector today, securing the expertise and the specialist focus of a dedicated financial consultant can make all the difference.
Establishing resilience to change, ensuring security and assurance for your employees and ensuring full regulatory compliance can all be achieved through a partnership with a Kreston Global firm. When working with Kreston Global you can expect access to free seminars and webinars, hosted by our specialists, sharing updates and trends affecting those within the charities and education sector, sharing the research we conduct and the invaluable insights it holds.
Since our conception in 1971, Kreston Global has upheld our company values, providing responsive, empathetic and personal support for our clients. With over 50 years of experience, we are experts in helping businesses grow and respond to change, fostering long-term partnerships built on trust and confidence.
In addition to our experience in providing financial services for the charity sector, Kreston Global’s members are committed to a culture of philanthropy, regularly contributing to fundraising efforts as well as volunteering within local communities.
Contact Kreston Global to find out how we can support your charities, not-for-profit and education business
Want to know more about our financial services for charities, not-for-profit and education? Get in touch
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