New guidance on delinked payments creates fairer system for farm buyers

Delinked payments will apply from 2024 and will be calculated based on an average of a farmer’s Basic Payment Scheme (BPS) receipts in 2020, 2021 and 2022. To be eligible for delinked payments, a farmer must have claimed Basic Payment in 2023 on a minimum of five hectares of land.

Defra’s previous standpoint was that where a farm has been transferred during or after the reference period and the seller did not claim BPS in 2023, the ‘history’ of these claims would be lost (with an exception for inherited land where special rules apply).

However, under the new guidance, 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).

Other than farm sales, the new rules also apply to tenancy changes and farmers who, since BPS 2020, have merged or split their business, incorporated or entered into partnership, or changed their SBI.

Details of how transfers of reference amounts will be processed are yet to be revealed, with Defra saying there will be a transfer period in early 2024.

Moreover, a transfer of land will be a requirement in certain cases, such as 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.

The land transfer must have occurred on or between 16^th May 2020 and 15^th May 2023 and will also be necessary where the transferee’s SBI number has been ‘closed’ with the RPA.

George Chichester, farming consultant at Strutt & Parker, said: “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 added.

“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.”