Update on delinked payments

Farmers are now seeing, in the form of the Lump Sum Exit Scheme and delinked payments, the last vestiges of the Common Agricultural Policy subsidy payments system that has benefitted the farming industry for many years. With the Basic Payment Scheme (BPS) coming to an end in 2023, farmers and their agents must now look forward towards what the Environmental Land Management Scheme and delinked payments have to offer. 

On 1st March 2024, further guidance was issued by DEFRA on the transition from BPS to delinked payments. The new guidance clarified the eligibility criteria for delinked payments, how reference amounts and delinked payments will be calculated and situations in which reference amounts can be transferred. 

Between 15th February 2024 and 10th May 2024, there is a narrow window during which it will be possible for farmers to transfer some or all of their reference amount, subject to various criteria being satisfied. Care may be needed over the next 5 weeks so that opportunities are not missed before the transfer window closes on 10th May (save for those claiming by inheritance).

Points for farmers and agents to consider before 10 May 2024

• If you are buying land, is there a case for including the transfer of delinked payments in the purchase? Some sellers will be unable to claim payments on their reference amount because they failed to make a BPS claim in 2023. A buyer of that land may pay something extra to acquire the seller’s reference amount. This will be a matter of negotiation between the parties and where applicable, should be factored into sale documentation. 
• New tenants or landlords taking surrenders are in a similar position to land buyers. Should reference amounts be transferred at these points of change? Again, depending on the terms of the lease or surrender documentation, this will be a matter of negotiation between the parties. 
• If a corporate or partnership seller is terminating the farming business, will it continue (and maintain its Single Business Identifier) so as to receive delinked payments? If not, should it realise some value now from selling any reference amounts? 
• If you are looking to dispose of your reference amount on sale or tenancy change, is the transfer of delinked payments going to fit in with the timescales for your transaction? Is the amount under discussion big enough to bring forward completion, for instance? Buyers do not need to buy your land to get benefit from the reference amount (if they satisfy the necessary criteria), so is anyone independently in the market?

Time is tight and the transfer window is narrow. Farmers and their agents should be encouraged to act sooner rather than later if they wish to take advantage of this limited opportunity before 10th May 2024.