Goodbye BPS…. Hello Delinked Payments.

Verity Gawthorp writes:

As our farming clients will no doubt be aware, the Rural Payments Agency (RPA) is to replace the Basic Payment Scheme in England with delinked payments from 2024.  This means that 2023 is the last BPS scheme year.  New regulations to deal with delinked payments are expected to come into force before the end of 2023, but have not been released as yet.

DEFRA and the RPA have, however, released some guidance, a copy of which can be found here:

https://www.gov.uk/guidance/delinked-payments-replacing-the-basic-payment-scheme

The delinked payments will be made annually from 2024 to 2027 (which is the end of the transition period).  DEFRA states that the first of these payments will be an advance payment of around 50% to be paid in August 2024, with the balance payment to be made in December 2024.  The delinked payments will then be paid in two instalments each year until 2027 and will decrease each year throughout this period.  The delinked payments will be paid whether or not you continue to farm, or sell all or any part of the land you previously claimed BPS entitlements over.

Are you eligible?

To claim delinked payments, you must satisfy various criteria:

• You must have made a claim for BPS in the 2023 scheme year for at least 5 eligible hectares (Note that there is an exception here in certain circumstances where a person has inherited land on the death of a farmer); and
• You have a “reference amount”. This is normally the average BPS payment paid during the reference period, which is the BPS claim years 2020 to 2022.  The claims made in the reference period do not need to be for the same amount of land, or even for land in the same part of England.

If you are eligible for delinked payments, the amount of payment you will receive (known as your “reference amount”) will not change if you sell any or all of your land after 16 May 2022.

Transfers

Although BPS entitlements are no longer transferable, you can transfer all or part of your “reference amount” to another eligible farming business.  To be eligible, this farming business must also have claimed and be eligible for BPS entitlements in the 2023 scheme year.  You can transfer all or part of your “reference amount”.

Note – it is not currently possible to make such transfers; the RPA will only allow these to take place during a transfer period which is likely to start in early 2024.  To transfer any or all of your “reference amount”, you have to tell the RPA how much of your BPS 2020 to 2022 “reference data” you want to transfer.

Examples

As the terms do become slightly confusing after a time, DEFRA and the RPA have provided an example to help:

Farmer A (let’s call him Alan) wants to transfer some of his “reference data” to Farmer B (let’s call her Betty).  Alan’s BPS payments for the 2020-2022 scheme years were as follows:

2020:     £20,000

2021:     £25,000

2022:     £15,000.

Alan’s “reference data” is £60,000 (the total payment Alan received for the above three scheme years).

Alan’s “reference amount” is £20,000 (£60,000 divided by 3, for the 3 scheme years).

Alan can transfer any amount of his £60,000 “reference data”.  Alan decides to transfer £45,000 of the reference data to Betty.  Alan’s new “reference data” is now £15,000 (£60,000 less £45,000).  Alan’s new “reference amount” is £5,000 (£15,000 divided by 3).

Betty’s “reference data” (before Alan transferred any part of his reference data to her) was £30,000.  By transferring £45,000 to her, Betty’s “reference data” increases to £75,000.  Therefore, after Alan has transferred part of his reference data to Betty, Betty’s new “reference amount” will be £25,000 (£75,000 divided by 3).

As stated, in order to claim the delinked sum, you must have made a claim for BPS in the 2023 scheme year.  However, even if you are not able to claim any delinked payments (because you have not made a BPS claim for the 2023 scheme year), you can still transfer your reference data.  If the farming business the reference data is being transferred to wants to claim delinked payments, they must also have claimed and been eligible for BPS in the 2023 scheme year (but there are some exceptions here if land has been inherited).

Please note, however, if you have applied under the Lump Sum Exit Scheme, you are not able to transfer your reference data.

There are other specific situations where you cannot transfer your “reference data”.  If any of the following criteria apply to you, then you can only transfer reference data if eligible land was also transferred and the land transfer took place after 15 May 2020 and before 16 May 2023 (“transferring land” can include selling or gifting land, or renting it out).  The criteria is a follows:

• Your “reference amount” is more than £30,000 and the transfer was of only part of your reference data, or is to more than one business;
• You want to transfer reference data which was transferred to you form another farming business; or
• You want to transfer reference data from a business where the SBI has been closed.

DEFRA and the RPA will provide more information and a more detailed timetable as we move forward.  Therefore keep a look out on DEFRA’s and the RPA’s websites for future updates.

Verity Gawthorp is a Fellow of the Agricultural Law Association and a Director at The Rural Law Practice branch of Thomson Hayton Winkley.   Contact Verity.

This article does not constitute legal advice and is correct at the time of publishing.  For specific advice on your circumstances, please contact us.