The RPA have recently confirmed that they are consulting on whether this will be the final year for national reserve entitlement allocations. This may then be many farmers’ last chance to gain an asset of some value for relatively little expense.
When a farmer or landowner meets certain criteria, they can claim free BPS entitlements from the government to cover up to the total area of their claim. Given at the time of writing entitlements are trading at £100-£160/ha for Non-SDA (the most common type of entitlement), this can represent a substantial saving.
Two groups qualify for national reserve entitlements. “New farmers”, broadly, are people who set up a farm business no more than 7 years ago and started claiming the BPS no more than 2 years later. “Young farmers” are people younger than 40 who control a farm business and have been claiming the BPS for less than five years. Young farmers also receive a 17.5% uplift on five years of BPS payments, which now includes the Greening element. These are broad outlines, and the criteria are in fact slightly more detailed than this. Certain specific evidence of business activity is also needed. It is worth speaking to a professional adviser if you think you might qualify.
This may appear limited at a glance, but there are ways the National Reserve can be used creatively by enterprising claimants.
Farm Business Tenancies
Even if the head of a business does not qualify for National Reserve entitlements, a claim can still sometimes be made if new land has been taken on. If more entitlements are required, the excess land could be rented out to someone within the business such as a junior member of a farm partnership or a company secretary. Remember that a partner who does not hold a majority stake is not considered in control of the business. If they qualify, they can make their own claim for National Reserve entitlements, pay their BPS to the main business as rent and allow it access through a licence or contract farming agreement. In this way, the cost of buying entitlements on the open market can be avoided.
However, there is always a cautionary note to add to such arrangements. They could technically fall foul of the RPA’s rules on “artificiality”, so professional advice would be needed before proceeding.
Naked acres
These are effectively a more ambitious use of Farm Business Tenancies. The arrangement above can also be reached with a third party. The claimant can rent land from an entirely different farmer in exchange for a payment. The claimant can then allow them access through a licence or contract farming agreement so they farm the land as previously. As tenant, the claimant is then eligible to claim on the land, and the instruction of another farmer under a licence or contracting agreement can count as a farming business, so allowing a claim to be made. This can be a new or young farmer claim. After a year (usually), the tenancy ends, but the claimant now has a collection of BPS entitlements which they can sell on the open market or retain to use on further land next year.
In RPA v King (2016) the RPA unsuccessfully challenged naked acre arrangements under EU legislation. However, care and professional advice should still be taken.
Succession
If land is transferred, the previous claimant can sell their own entitlements while their successor seamlessly makes a new or young farmer claim on the land. This allows additional income to be earned above that gained from simply transferring the entitlements across to the successor.
Commons
A BPS claim is not always set just by occupied land. Commons rights can also be used for National Reserve entitlements. If you own property with rights to grazing rights for livestock on a common it may be worth making a National Reserve claim even if your property has relatively little land. However, if doing this, you must also “use” the common, either by turning animals out on it or maintaining boundaries and clearing scrub, although this work need not be extensive.
This is compounded for New Forest commoners. BPS claims on the New Forest are calculated by the number of livestock “marked” to graze it. This means the more livestock a claimant marks, the greater their claim will be so, if eligible, the more National Reserve entitlements they will be allocated. These rules are currently under review, with Consultations being carried out by the RPA this year.
