Farm buyers can now claim delinked payments in latest rule change
1st June 2023
New guidance released by Defra states that farm buyers are now eligible to claim delinked payments on recently purchased land, provided they made a valid BPS claim this year.
Starting from 2024, delinked payments will be calculated based on an average of a farmer’s Basic Payment Scheme (BPS) receipts in 2020, 2021 and 2022. In order to qualify for delinked payments, farmers must have claimed Basic Payment in 2023 for at least 5 hectares of land.
Prior to Defra’s announcement today, farms that have been transferred during or after the reference period where the seller did not make a claim in 2023 would lose their history of BPS claims (with an exception for inherited land where special rules apply).
However, the latest guidance suggests that anyone can transfer all or part of their reference amount to another business or businesses, unless they have claimed the Lump Sum Exit Scheme, provided the receiving business made a valid BPS claim in 2023 (except for some inherited land cases).
Alongside farm sales and tenancy changes, the new rules might also apply to farmers who, since BPS 2020, have merged or split their businesses, incorporated or entered into partnership, or changed their SBI.
Details are yet to come on how transfers of reference amount will be arranged, with Defra saying there will be a transfer period in early 2024.
Moreover, there will be conditions applied to certain transfers. For example, where the reference amount is worth more than £30,000 and only part has been transferred or the transfer was to more than one business, a transfer of land is also required. The land transfer must have occurred on/between 16th May 2020 and 15th May 2023 and is also necessary where the transferee’s SBI number has been ‘closed’ with the RPA.
George Chichester, farming consultant with Strutt & Parker, says: “To date the government has been saying that delinked payments will be based on your past claims history and if you don’t have any claims history during the reference period then tough. So, it had looked as if someone who had bought a farm over the past three years was going to miss out.
“This new guidance suggests that a ‘new farmer’ will be able to take over the history of the farmer who sold the property and still get the benefit of the diminishing BPS payment up to 2027, so long as the new farmer claimed Basic Payment this year.
“This feels like a much fairer and more equitable decision, as it seems only right that if you have bought a farm, you should be left in the same position as the vendor was,” he pointed out.
“Landlords and tenants who have given land up or taken land back in hand since May 2020 may also want to look at how they may be affected by these changes, in the light of entitlements clauses in relevant tenancy agreements.”
