The RPA have provided further information about the BPS Delinked payment. Whilst payment rates are yet to be confirmed, other important detail has been given:
- The reference period for Delinkage is now 2020-2022. This means that entitlements bought for the current scheme year will be factored into the Delinked payment.
- Each year’s Delinkage payment will be based on the average payment received during the three claim years of the reference period, with the annual reduction applied between 2024 and 2027 (only 2024 confirmed so far).
- You do not need to have been farming prior to the reference period.
- This means even if you begin farming this year, you will still be able to claim some Delinked payments, one third of what you would receive if you had claimed throughout the reference period.
- A successful BPS claim must be submitted in 2023 for Delinkage to be claimed, but the size of this claim will not be factored into the calculation.
- Breaches and penalties, including for greening, cross compliance, overclaims etc, will not be factored into the Delinked payment.
- Where an overclaim has been made during the reference period, the claim will be reduced to the actual area for calculation purposes.
- An application of some kind will be required for the payments. It is not known at this stage if this will be submitted annually, or just once for all payments.
- If your SBI has changed during the reference period or for 2023, this may affect the payments you receive.
- Delinked payments are to be treated as income for tax purposes.
- Delinked payments cannot be claimed when a retirement lump sum payment claim has also been made.
- On Delinkage, i.e. after 2023, BPS entitlements will cease to have effect and so will be effectively abolished. Given that entitlements have a market value, this may constitute an allowable loss for Capital Gains Tax purposes.
- Unlike the Retirement Lump Sum, the farming business will still be able to participate in ELMS and other agri-environment schemes.
These proposals apply to the BPS in England only. No similar scheme has yet been announced for Scotland, Wales or Northern Ireland. Cross-border farmers with holdings both in England and other UK nations will, unless such an announcement is made, continue to claim the BPS as normal on their land outside England.
This information for now is drawn from the RPA’s initial proposals, and is pending further, more detailed guidance and the creation of enabling legislation, so may still be subject to change.
Professional advice should be taken before relying on this information and if you would like to discuss your particular situation, please contact Hugh Townsend. You will also need to check whether you would be better off buying more entitlements this year.
