As 2023 ended, so too did the Basic Payment Scheme (BPS) in England as we knew it. The Agriculture (Delinked Payments and Consequential Provisions) (England) Regulations 2023 (SI 2023/1430) came into force on 1 January 2024, and delinked payments became the new reality for those in the agricultural sector for the next few years.
For some farmers delinked payments provide useful income to supplement SFI or CSS payments. But things are not so straightforward where there has been a change in business structure, a farm sale, a tenancy changeover or where a farm has been inherited since 2022. We consider the new transfer rules which have come into force and explain how they can help.
Delinked payments replace the direct payments made to farmers under BPS. They are due to be paid to farmers who claimed, and were eligible for, BPS payments in England during the 2023 BPS scheme year. Delinked payments will be made until 2027, the end of the agricultural transition period defined in the Agriculture Act 2020 and will be gradually reduced each year. At the end of the agricultural transition period, delinked payments will be phased out altogether, leaving farmers to rely on the Environmental Land Management schemes (ELMS) for financial support.
Unlike direct payments under BPS, delinked payments do not attach to a particular piece of land. A farmer will be eligible for delinked payments if they claimed and were eligible for BPS in the 2023 claim year and have what is known as a “reference amount”. This reference amount is based on the average BPS payments they received for the BPS 2020, 2021 and 2022 scheme years.
Provided a farmer satisfies these criteria even if the extent of their land changes, or their land use changes – indeed, even if they leave farming and no longer own the land, they will still be eligible to receive delinked payments. New entrants to farming and farmers who have received a payment under the BPS Lump Sum Exit Scheme will not be eligible to receive delinked payments.
Statements were sent out by DEFRA at the end of 2023 confirming the reference data from BPS claims made during 2020-2022. Claimants have until 29 February to challenge these statements if they believe they are incorrect.
Delinked payments will be made in two instalments per year and must be paid by the Secretary of State before the expiry of 13 months from 01 January in the year to which the payment relates (anticipated August and December). If the payments are made to a farming business, they will be treated as income for tax purposes.
Unlike BPS entitlements, which were annexed to and therefore transferred with land, delinked payments themselves cannot be transferred. The RPA will agree to a transfer of some or all of a farmer’s reference data – details of the gross BPS payment amounts paid to them for 2020, 2021 and/or 2022 – in certain circumstances.
A transfer of reference data will enable a different farmer or farming business to apply for delinked payments by enabling them to calculate the reference amount (the average of the BPS payments made between 2020 – 2022) needed to be eligible for delinked payments.
However, the other condition for receiving delinked payments, namely the need to have claimed under the Basic Payment Scheme in 2023, will still apply to the claimant (apart from those inheriting land), so a transfer of reference data will not help if the recipient did not submit a BPS claim in 2023.
The window for the transfer of reference data is between 15 February to 10 May 2024[1], and the RPA states that any queries about transfers should be put to them as soon as possible before 29 February.
A transfer of reference data may be necessary if a farm’s business structure has changed between the 2020 – 2022 BPS years, meaning a new Single Business Identifier number has been issued to them during the reference years.
A transfer may also be required if some or all of the farm is being sold or a tenancy is ending and the person transferring the land has agreed to allow the purchaser or new occupant to be able to apply for the delinked payments. However, unless the sale contract or tenancy agreement requires this, there is no obligation on a farmer to transfer reference data to enable the purchaser/new occupant of the land to be able to apply for delinked payments – they may well be able to keep this data, and the payments, for themselves. Parties considering this issue will need to check the terms of the sale contract or tenancy agreement to see whether an obligation to transfer data was included.
Different rules apply for eligible land which has been inherited. In this instance, a request can be made to the RPA to transfer the relevant proportion of the reference amount to the beneficiary, enabling them to receive delinked payments. It is not yet clear whether requests to transfer on the basis of inheritance will be subject to DEFRA’s transfer window, or whether exceptions will be made to enable reference data in inheritance scenarios to be transferred throughout the year.
The transfer rules provide that where the reference amount is more than £30,000 and a transfer of part of the reference amount is requested, the transfer will have had to have taken place between 15th May 2020 and 16th May 2023 and the RPA will require evidence of the transfer of the land, whether a farm sale or end of a tenancy.
Cross compliance rules do not apply to delinked payments. The Agriculture (Removal of Cross-Compliance and Miscellaneous Revocations and Amendments, etc) England Regulations 2023 also came into force on 01 January 2024 and these regulations removed cross compliance requirements for the recipients of farm payments – although in reality many cross compliance standards are still relevant for farmers under other guidance and legislation.
It is possible to receive delinked payments and to apply for payments under ELMS – the two are not mutually exclusive. The SFI and CSS are already available and Landscape Recovery and other public and private schemes are being developed.
Delinked payments will now form part of an eligible farmer’s income until 2027. Farmers should ensure that they have checked the information statements received from the RPA outlining the payments they are due to receive.
Where a business has been restructured or there has been a farm sale or tenancy changeover since 2020 the new transfer of reference data rules may help to enable a new occupant to receive the delinked payments, but this will depend on the circumstances, the intention of the parties and the relevant documentation.
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