The Department for Environment, Food and Rural Affairs (DEFRA) has announced further details regarding the plans to replace the Basic Payment Scheme (BPS) in England with delinked payments. Currently, there is a defined plan for the phasing out of BPS payments to 2024, at which point the payments made to farmers will be approximately half of the payment received prior to phasing out.
The delinked payments, from 2024 to 2027, will be calculated on the average of the BPS payments made to a business in a reference period, 2020-2022, and then reduced based on the size of the claim as they are gradually phased out with the last payment made in 2027.
The delinked payments will not be affected by changes in farm size, nor if the land use of the holding is changed after BPS 2022. Following BPS 2023, entitlements will be cancelled to a nil value.
If there have been changes to a business since the start of the reference period (being BPS 2020), this could affect the amount of the delinked payment received.
Lump Sum Exit Scheme
The Lump Sum Exit Scheme (LSES) will provide BPS applicants who wish to leave farming with an opportunity to do so in a planned way. The scheme makes an up-front payment of a farmer’s future BPS payments so long as they surrender their entitlements and transfer out their land.
In order to be eligible for the scheme, applicants must have either:
In order to receive the lump sum payment, applicants must apply this year and then by 31st May 2024 must:
Applicants will still be able to work as a contractor or work for other farmers once they have received the lump sum payment.
A sole trader cannot transfer land to a spouse/civil partner, or to someone with whom they are cohabiting as a couple.
If a farmer decides to take the lump sum payment, they will no longer be eligible for BPS payments or delinked payments. Similarly, it is unlikely that a farmer will be able to meet the rules of other schemes, such as Countryside Stewardship or Sustainable Farming Incentive, if they have taken the lump sum payment.
The LSES reference amount is calculated by the average of a business’s BPS payments received in 2019, 2020 and 2021. This amount is then multiplied by 2.35 and this will be the lump sum available for each business. The reference amount will be capped at £42,500 meaning a total cap on the LSES payment of just under £100,000.
LSES applications will be open from April to September 2022. This is a one-off, non-competitive scheme, and all applicants must transfer out their agricultural land and provide evidence of this by 31st May 2024. If applicants wish to enter their agricultural land into woodland creation schemes instead of transferring it, they must be accepted into the scheme and have planted the trees by 31st May 2024.
There are a number of considerations for a business thinking about taking the LSES and therefore we would encourage people who feel it could be of interest to consider the scheme early as the application window is relatively short.
For more information or to find out how our Rural Property & Business department can help you please contact 01234 352201 or 01280 428010 or email email@example.com