Accounting rules for schools have changed… making it even easier to lease from Utility Rentals
Accounting rules for schools have changed… making it even easier to lease from Utility Rentals
Utility Rentals is proud to be the UK’s longest-running school equipment leasing company. Our specialist expertise in this area means we know our CNC routers from our laser cutters – and it also means we are well acquainted with the education sector’s rigorous compliance requirements.
If you are a supplier who has ever had a quote rejected because of a lack of compliant funding options or a school that has struggled to finance costly equipment or infrastructure upgrades, you will know already that these regulations are not always easy to navigate. If you would like some help from the experts, you are in the right place!
Or perhaps you are already one of our many happy customers or suppliers who have benefitted from our compliant funding solutions and you are wondering about the recent changes in leasing regulations. Read on for an explanation of the new international standard that applies to all UK maintained schools and what it means for you. (Spoiler alert: it’s good news!)
What has changed?
On 1 April 2024, schools were brought in line with other parts of the public sector and must now adhere to the new international financial reporting standard, IFRS 16, which changes the way local authorities recognise leases entered into by their maintained schools in their accounts. Specifically, it has removed the distinction between operating leases and finance leases for accounting purposes.
Previously, operating leases were the only way state-funded schools were allowed to lease equipment, as finance leases were classed as borrowing (and, as such, a liability). Finance leases could not, therefore, be entered into without the approval of the Secretary of State for Education – which meant long waits and cumbersome paperwork. Operating leases, on the other hand, as hire rather than credit arrangements, got an automatic green light.
Now, the arrival of the IFRS 16 means that all leases are categorised as borrowing and must be approved by the Department for Education (DfE).
If this sounds problematic, don’t worry. The DfE has given general consent that pre-approves a comprehensive list of assets, granting schools easy access to funding for a wide range of equipment. This includes IT equipment, catering equipment, furniture, bathroom and sanitary items, LED lighting, and more.
How are schools affected by IFRS 16?
As capital budgets remain squeezed, leasing continues to offer a great way for schools to spread the cost of new equipment and other assets. In fact, by leasing high-value equipment such as interactive screens or VR classrooms sets, a school can acquire three times as much equipment right now by leasing it as opposed to purchasing it outright.
For example, a school with nine classrooms could choose to purchase three interactive screens a year for the next three years, but by leasing, the school could acquire all nine screens now and fund the project over the next three years. So, leasing from Utility Rentals instead, the school could benefit from all nine screens at the same time, giving every pupil in each classroom the same enhanced learning environment at the same time.
Plus, schools can benefit from the invaluable peace of mind that comes from being able to add in extra costs such as installation, ongoing maintenance and even training to their rental payments, as well as take advantage of warranties and the freedom to return and upgrade equipment at the end of its useful life.
Far from being a stumbling block or a cause for more dreaded paperwork, the recent changes – coupled with the DfE’s list of pre-approved leasable equipment – actually mean that schools can access funding for a broader range of assets than ever before, including those that may not previously have qualified under the old operating lease legislation.
And it’s not just new classroom kit we’re talking about here. Even wider-reaching upgrades like investing in eco-friendly hygiene equipment or energy-efficient lighting can be made without the requirement for a lengthy application to the Secretary of State.
Academy trusts will have permission to lease assets from the same pre-approved list as maintained schools from 1 September 2024, although they will still be required to distinguish between operating and finance leases.
How can Utility Rentals help make school budgets go further?
Importantly, the new standard does not alter the need for schools to conduct due diligence. They must still be able to show that any lease agreement they enter into is providing them with the best value for money.
Which is where the budget-stretching offering at Utility Rentals comes in! Having worked with thousands of schools, academies, colleges and universities for nearly four decades, we consider ourselves experts at making education budgets go further.
Our flexible rental agreements allow schools to spread the cost of up-to-date, high-quality equipment into manageable payments – termly, quarterly, annually, or in line with an individual payment plan. And because we look after the assets for the life cycle of the rental, schools are assured a top-quality classroom experience without any nasty surprises.
That’s a win–win for schools and suppliers alike. Schools trust us to make the most of their budgets and suppliers have access to customers who might not otherwise be able to afford their products.
And, because the list of assets pre-approved by the DfE for lease under the IFRS 16 covers pretty much everything we offer here at Utility Rentals, we can continue to offer the same exceptional end-to-end customer service that we have always prided ourselves on.
The Utility Rentals difference
Unlike global legislative changes, we move quickly here at Utility Rentals! As we have outlined above, there is no need for time-consuming eligibility checks or a lengthy application process, despite the changes brought in by IFRS 16.
All schools remain automatically eligible for our leases, and quotes for state schools and academies are instantly approved. What’s more, all our paperwork is electronic, so there are no frustrating admin delays further down the line.
We can finance projects of almost any type and size, and we even offer bespoke leasing solutions. So, from robots in the classroom to hand-dryers in the washroom, dishwashers in the kitchen or iPads for every pupil (and teacher!), we can help schools keep their classrooms up to date and their sites well equipped.
The Utility Rentals difference means compliant leasing at competitive prices. The accounting rules may have changed but our service remains top of the class!
Contact our team of experts today and ask about our IFRS 16-compliant leasing agreements.
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