Defra opens door for farm buyers to claim delinked payments

New guidance from Defra has highlighted that where a farm has recently sold then the reference amount on which delinked payments will be based can be transferred to the new owner.

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 not less than 5 hectares of land).

Previously, Defra had indicated that where a farm has been transferred during or after the reference period and the seller did not claim in 2023, the ‘history’ of these claims would be lost (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).

In addition to farm sales and tenancy changes, Defra says this might also be applicable to someone who, since BPS 2020, has merged or split their business, incorporated or entered into partnership, or changed their SBI. 

Details of how transfers of reference amount will be arranged are not yet available, but Defra says there will be a transfer period in early 2024.

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, it must have been accompanied by a transfer of land. The land transfer must have occurred on/between 16 May 2020 and 15 May 2023.  A land transfer 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.

“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.”