Farming exit scheme Published 8 February 2022

[gone up the hill]

Would you need to repay the BPS lost over the next 4 years?

I imagine the estate/ landowner would want the BPS value lost over the next four years paid by the outgoing tenant or the costs of buying in new entitlements if they surrendered their current entitlements to RPA if they claimed under this scheme.

Thus the above makes it a total non starter for most tenants wanting to quit unless the landlord is happy to forego any bps over the next 4 years as they will have no entitlements to claim on said land unless they buy some new ones/ have spare ones they can use from land that has for example gone for building.

 

[midlandslad]

I imagine the estate/ landowner would want the BPS value lost over the next four years paid by the outgoing tenant or the costs of buying in new entitlements if they surrendered their current entitlements to RPA if they claimed under this scheme.

Thus the above makes it a total non starter for most tenants wanting to quit unless the landlord is happy to forego any bps over the next 4 years as they will have no entitlements to claim on said land unless they buy some new ones/ have spare ones they can use from land that has for example gone for building.

This will make the entitlement market strong, as the number of entitlements cancelled will increase.

 

[Big Al]

Good afternoon all

Today we've published information about our lump sum exit scheme for farmers who wish to exit the industry.

The new Lump Sum Exit Scheme will support farmers in England who wish to leave the industry though a lump sum payment, allowing them to exit the sector in a managed way. We expect farmers will be able to apply from April to the end of September 2022.

To be clear, this is not intended to push anyone to leave

– it’s for those who want to leave, where a lump sum payment might help them to do so in a managed way.

We’ve also confirmed that the Government intends to legislate to make clear that lump sums paid out under the scheme will be treated as capital for tax purposes.

The news release is here: https://www.gov.uk/government/news/...upport-farmers-who-wish-to-leave-the-industry

The Government response following our consultation about the scheme last year is here: https://www.gov.uk/government/consu...rs-lump-sum-exit-scheme-and-delinked-payments

Details of the scheme can be found here: https://www.gov.uk/government/publi...-or-retire-from-farming-and-delinked-payments

Happy to answer any questions about the policy - the RPA are standing ready to answer any specific questions about your individual circumstances and eligibility on their normal helplines:

Email: [email protected]

Telephone: 03000 200 301

@Janet Hughes Defra

Would land that was entered into a biodiversity net gain (BNG) scheme on a 25 year agreement qualify as being transferred out.

Specifically a BNG scheme that was managed as species rich wild flower meadow, that included management obligations to make a cut of hay once a year.

 

[serf]

,

 

[Janet Hughes Defra]

How many of those were owner/occupiers though

We've had feedback from both tenants and owner occupiers that a lump sum exit scheme could be useful for those who are thinking about leaving farming

 

[Janet Hughes Defra]

@Janet Hughes Defra “The lump sum will be paid once the applicant has provided evidence that they have met the eligibility rules,”
Will the payment window be the same as BPS ie; 1st Dec onward?

No, we expect that payments will begin from November this year for farmers who have already met the scheme rules by then (including having transferred their agricultural land where required).

 

[Janet Hughes Defra]

@Janet Hughes Defra could you explain what the reasoning/objectives/drivers etc are for encouraging some farmers to retire?

Thanks

Some farmers have told us that they would like to leave farming and that a lump sum payment could help them do this. This scheme is intended to provide an option for farmers.

 

[Janet Hughes Defra]

Can anyone with a sob story rock up and get a big wad from the government for doing nothing?

The lump sum payment would be in place of the direct payments the farmer could have received over the rest of the agricultural transition period. It allows them to have their money up-front.

 

[Janet Hughes Defra]

So as a Tenant Farmer if i retire with 100HA of entitlement. I then terminate my tenancy, which requires me to hand back the entitlements to the landlord. What evidence am i required to provide to you and how much will i be paid?

Lump sum payments are based on the farmer’s average BPS payments for scheme years 2019 to 2021 (capped at £42,500), multiplied by 2.35. If you don’t surrender enough entitlements, by value, your lump sum could be reduced – there is more information about this in our guidance (https://www.gov.uk/government/publi...-delinked-payments-how-the-payments-will-work). We will issue further guidance about how to apply, including the evidence you will need, before applications open in April.

 

[delilah]

Just an observation; on farming today this morning this was talked about, was no mention of it being no more than the BPS up front, all the general public heard was 'up to £100k to quit farming'. For that reason alone - the absolutely dire impression it gives of UK ag to the other 99% of the population - this is a crackpot scheme.

 

[Mixedupfarmer]

Under this scheme you would have to surrender your entitlements to the RPA and not your landlord if you wanted to retire using this scheme so you would then if it says in your tenancy agreement that the entitlements should be returned to your landlord if you quit/ the tenancy has ended have to pay your landlord the value of the entitlements/ any SFP lost over the next 4 years which would be far more £ than you would receive under this scheme!

Reality is that few if any farmers will for one reason or another be able to take up this scheme.

Very much this scheme has been designed to fail ( just like the new sub arrangements have been done so ) and pay out very little if any money to the farmers/ tenants etc that actually need the money!

Could surrender your entitlements to the RPA, and buy some in to give back to landlord? Would be better than paying compensation to landlord for future BPS, or not claiming on exit scheme? And no future rent to find, with rapidly diminishing BPS.

 

[Janet Hughes Defra]

Lets hope your visit isn't to yet another large arable estate, there are other types of farming!

I was visiting 3 different horticultural growers in West Sussex (1 small family business, 1 cooperative, 1 larger corporate) and then having dinner with a group of diary farmers - I try to meet and visit a wide range of farmers and am always open to suggestions of people to talk to

 

[Bossfarmer]

Lump sum payments are based on the farmer’s average BPS payments for scheme years 2019 to 2021 (capped at £42,500), multiplied by 2.35. If you don’t surrender enough entitlements, by value, your lump sum could be reduced – there is more information about this in our guidance (https://www.gov.uk/government/publi...-delinked-payments-how-the-payments-will-work). We will issue further guidance about how to apply, including the evidence you will need, before applications open in April.

Whys it capped so low? The majority of farmers i speak to are getting over 100k a year why are they being unfairly excluded?

 

[Dry Rot]

Whys it capped so low? The majority of farmers i speak to are getting over 100k a year why are they being unfairly excluded?

Hold on a minute! I thought this was England only? Bossfarmer seems to be located "between Perth and Inverness"? I did ask quite early on if the scheme also applied to Scotland but got no reply.

As a famer in my 80s, I don't receive any 'direct payments' so can hardly receive BPS (or what the hell it is now called) as a lump sum in advance.

I've made inquiries to see what young farmers might like to take over my farm, but got no reply. Looks like I will be sitting here living (and farming) on my state pension letting things re-wild naturally until nature finally takes it's course.

It is quite obvious to me why young farmers can't find farms to farm. But I did get an offer from an alpaca sanctuary so perhaps I ought to reconsider that?

 

[Ramrod]

@Janet Hughes Defra - Thank you for your response's

 

[DRC]

Whys it capped so low? The majority of farmers i speak to are getting over 100k a year why are they being unfairly excluded?

I don’t think the phrase £100k year and unfair, belong in the same sentence . It’s not for Scotland anyway .

 

[Treacle Sponge]

Lump sum payments are based on the farmer’s average BPS payments for scheme years 2019 to 2021 (capped at £42,500), multiplied by 2.35. If you don’t surrender enough entitlements, by value, your lump sum could be reduced – there is more information about this in our guidance (https://www.gov.uk/government/publi...-delinked-payments-how-the-payments-will-work). We will issue further guidance about how to apply, including the evidence you will need, before applications open in April.

Unfortunately, as said before, this is not an option for tenants whose entitlements belong to their landlord and it is tenants who are the most likely to need this.

 

[Ramrod]

Unfortunately, as said before, this is not an option for tenants whose entitlements belong to their landlord and it is tenants who are the most likely to need this.

See post 211

 

[Treacle Sponge]

See post 211

Diminished benefits then

 

[serf]

01392 823935 Exeter Livestock Market EX2 8FD www.townsendcharteredsurveyors.co.uk

ENGLAND - BPS LUMP SUM EXIT SCHEME - DETAILS ANNOUNCED TODAY Details have been announced today of the Lump Sum Exit Scheme (aka the “retirement lump sum”), including eligibility requirements and the application window, which are summarised here. If you have given up land since 2020 the scheme is worth considering: The value of the payment will be calculated from a reference period, which will be 2019-2021. The retirement lump sum claim will be 2.35 times the average value of your claims in these three years. The lump sum is capped at £99,875. This means that if your average claim value during the reference period is above £42,500, it will be treated as £42,500 for calculation purposes. Therefore, if you claimed £10,000 each in 2019, 2020 and 2021, your retirement lump sum payment will be £23,500. If you claimed £9,000 in 2019, £10,000 in 2020 and £11,000 in 2021, it would also be £23,500. If you claimed £10,000 in 2020 and 2021 but did not claim in 2019, your payment would be £15,667. 2021 claims do not factor in the tapered BPS reductions which began the same year. However, any reductions for overclaims, cross compliance breaches, greening penalties etc will be factored into the calculation for all years. To claim the lump sum, you must surrender all of your entitlements. If you surrender fewer entitlements than were used in your most recent claim within the reference period, your lump sum claim will be reduced. Therefore, it may be worth buying extra entitlements if you do not currently have enough to meet this requirement, i.e. you will not maximise your claim unless you surrender as many or more entitlements as were used in your most recent claim in the reference period. To claim the lump sum, you must surrender all but 5 ha of the land you currently farm. This can mean selling/giving it away, letting it out on an FBT for 5 years or more, planting it with woodland funded by a grant scheme such as EWCO, surrendering any agricultural tenancy, or retiring from a tenancy under the Agricultural Holdings Act 1986. We await the RPA’s evidence requirements in respect to unwritten agreements and grazing and cropping arrangements. You could have surrendered land before you apply for the Exit Scheme, and before today’s date, but you may need to have occupied at least some agricultural land on the 17th May 2021 (although you do not need to have submitted a claim in 2021). It is unclear whether you could claim the lump sum if you surrendered all (or all but 5ha or less) of your land before the 17th May 2021. At a minimum, you must at least have claimed in one year of the reference period (so 2019 at the earliest) as well as in 2018 or before. Farm buildings, “non-agricultural land” by the RPA definition (so concrete, hard standing, existing woodland etc), and farmhouses do not need to be given up. To claim the lump sum, you must have submitted a BPS claim in 2018 or earlier, unless you either inherited the land you farm or succeeded to it via the succession provisions of the Agricultural Holdings Act 1986 after the 15th May 2018. All rights of grazing and pannage over commons must also have been transferred away. On claiming the lump sum, you will not be able to claim the SFI or apply for most options under Countryside Stewardship or the emerging “Local Nature Recovery” ELMS scheme. The RPA says that they expect existing CS and ES agreements to be transferred to whoever takes on the land following your retirement. It is not clear how existing agreements just on the 5ha or less of retained land will be handled. A partnership can claim the lump sum if a partner/partners entitled to 50% of profit (combined) leave/s the partnership, and a company can claim the lump sum if a shareholder/shareholders holding 50% of shares leave/s the company. However, the company or partnership must surrender all its entitlements and will then be unable to claim BPS or delinked payments. Partnerships and companies “retiring” in this way will still be able to claim the SFI and Local Nature Recovery scheme in full and apply for Countryside Stewardship without restriction. The company or partnership also cannot then be dissolved and have its land transferred to individual shareholders or partners (although they will still be able to claim the BPS and delinked payment on any land they occupy as individuals). It is unclear whether company or partnership land could be transferred to a separate, new company or partnership with some of the same partners/shareholders, and whether that entity could then claim the BPS in 2022 and 2023. The scheme will open for applications in April, and the deadline will be the 30th September 2022. The Lump Sum will only be paid once your entitlements have been surrendered and the RPA is satisfied that you no longer occupy more than 5ha of agricultural land (or the required partners/shareholders have left the partnership/company). You can continue to claim the BPS prior to surrendering your land, even if your application for the scheme was successful. However, the value of your 2022 and/or 2023 claim will then be deducted from the lump sum. The ultimate deadline for retirement i.e. completing on a sale, surrender of a tenancy, completing the letting and the transfers or woodland creation project is the 31st May 2024. This can sometimes be extended for probate or Agricultural Holdings Act 1986 succession cases. The retirement lump sum is subject to Capital Gains Tax. We await the application forms for the finer detail. To start considering an application, the first step is to obtain a “forecast statement” from the RPA. We would be happy to arrange this for you free of charge.