Academies: Managing related parties 

Under the ATH 2025, related parties are defined in line with the Charity SORP (FRS 102).

Common examples include:

• Sponsors with control or significant influence
• Any member or trustee of the academy Trust
• Individuals or bodies with the right to appoint a member or Trustee
• Close family members of a member or Trustee
• Persons in business partnership with a member or Trustee
• Key Management Personnel of the academy Trust
• Organisations connected to a member or Trustee (where the individual holds more than 20% of voting rights or shares).

The ATH 2025 requires that the process for capturing related party arrangements begins at induction and continues as an annual exercise. All members, Trustees, and senior leaders must declare pecuniary and business interests for close family members, and for themselves.

These declarations should be actively managed, not simply filed away, and should be accessible to finance teams to prevent inadvertent transactions with related parties.

Academies are required to follow a number of additional requirements in addition to the SORP as follows:

• All related party transactions must be reported to the DfE in advance via the DfE’s online portal, regardless of value.
• Transactions or contracts exceeding £40,000 require prior DfE approval.
• The board must document and minute its decision-making process, demonstrating that the transaction is necessary, offers value for money, and is in the Trust’s best interests.
• The ‘at cost’ principle is applicable to related party transactions with sponsors, members and trustees and close family members or businesses connected with sponsors, members and Trustees.
• Where the 'at cost' principle applies related parties must not profit from their dealings with the Trust. Written confirmation that transactions are at or below cost is required, and benchmarking against external suppliers is strongly advised.
• Conflicts of interest must be declared at meetings, and individuals with a conflict should withdraw from discussions and decisions relating to the transaction.

• Existing agreements with related parties should be reviewed at least annually to ensure ongoing value for money and compliance with current rules.
• Employment contracts with related parties (including Trustees) must be disclosed in line with SORP (FRS 102) and ATH 2025 requirements although they do not need to be reported via the DfE portal.
• Related party transactions with colleges, universities, academies and schools which are sponsors of the academy trust do not need prior DfE approval.
• State funded schools and colleges, including academy Trusts are also excepted.
• Any amendments to agreements that could push the total value over the £40,000 threshold must be reported and approved before proceeding.

• Ensure your register of interests is comprehensive, up to date, and regularly reviewed.
• Ensure the people completing the declarations understand what they are required to disclose.
• Embed related party checks into procurement and payment processes.
• Remind trustees and senior leaders on the latest ATH 2025 requirements.
• Plan ahead for transactions that may require DfE approval to avoid operational delays.
• Review all existing related party agreements annually and document the review process.