The Future of BPS

Now all farmers have submitted their Basic Payment Scheme applications and agri-environment scheme revenue claims for this year we thought it maybe timely to outline the significant changes for farm subsidies over the coming years. The final payment year for the Basic Payment Scheme is to be 2027, with reductions starting in 2021. The table below sets out the cuts for the next four scheme years.

Payment banding

% BPS Reduction for the band





Up to £30,000















Over £150,000





Going forward the Agricultural Act sees the phasing out of the Basic Payment Scheme, Delink of Direct Payments (BPS) and the introduction of the New Environmental Management Scheme. DEFRA have just published further information on the long-awaited introduction of a retirement scheme and how delinked Basic Payments should work. The plan shows that a lump sum will be offered in place of a farmer being paid annual direct payments up until 2027. The exact detail is subject to change, however the current plan for the lump sum exit scheme is as follows:

  • A one-off scheme for applications in 2022 only
  • Payment will be 2.35 times the average of the BPS payment in 2018, 2019 and 2020
  • An all or nothing scheme – all BPS entitlements will be cancelled
  • No stewardship agreements may be entered into by the lump sum recipient for the remainder of the transition period (which runs until 2027) or the lump sum must be repaid.

As it currently stands the scheme is only open to farmers leaving the industry and not to farmers who intend to remain farming therefore land must be given up, ie. sold, gifted or leased out on a minimum five year Farm Business Tenancy (FBT) or passed to an Agricultural Holdings Act (AHA) successor. The successful applicants will however be allowed to stay in a farmhouse and keep up to 5% or 5ha (whichever is the smallest) of their agricultural land. All partners and directors of the business will be unable to claim BPS elsewhere, however they could still work as a contractor or for another farming business. The land given up can still be used for the new occupier to claim BPS.

Alongside the lump sum exit scheme, DEFRA has also outlined how ‘delinking’ will work so it is likely that all remaining BPS payments will be ‘delinked’ from land in 2024 and therefore there will be no need to submit an annual BPS claim form. The delinked sum is still to be confirmed but applicants must have been farming up to the end of 2023 to be eligible. If DEFRA delink payments, technically cross compliance will also come to an end but I’m sure something further will be introduced to maintain these in practice.

I am sure some conversations will be had between landowners and farmers around the proposed retirement scheme and we are expecting further detail on a proposed new entrant scheme later this year which should be available from 2022 so many changes ahead. If you are considering looking at the retirement scheme please get in touch early as conversations will be needed with your accountant to consider the tax implications. We will be working closely with Evolution ABS to ensure the best outcome is achieved for all applicants.

Regarding environmental schemes, there are a number of schemes in discussion but we understand there could be various grants over the coming years to include a productivity grant scheme coming this autumn and support for covering slurry stores in the next couple of years, due to water and air quality being high on the government’s agenda at the moment.

The Sustainable Farming Incentive is likely to be more of a whole farm scheme and pilots have started now with the first agreements starting in October 2021. The scheme looks to be based around environmentally sustainable farming e.g. soil management, arable and grassland options, farm woodland and management of boundaries but we can expect more detail in the next 12 months.

The Mid-Tier Countryside Stewardship continues to prove to be a positive scheme with farming businesses throughout the South West coming to the conclusion that the Mid-Tier Countryside Stewardship allows for additional income relating to land parcel options, with the other significant benefit being the vast amount of capital works available. This can include livestock fencing and if you are in the water target area it can also include roofing silage pits and outside livestock yards as well as concreting.

There does seem to be considerable interest in Countryside Stewardship this year and as a lot of information does need to be provided in advance, therefore it is worth looking at options well in advance of the deadline of 30th July. Applications that are submitted this summer will have a start date of 1st January 2022 for a five year agreement with all capital works to be completed within the first two years. Please note the Mid-Tier Countryside Stewardship doesn’t have to cover the whole farm. It can be placed on specific land parcels. Ultimately we can make the scheme fit your requirements.

It is worth mentioning that the Countryside Stewardship Scheme will continue to be available with the last new applications being accepted in 2023. Anyone that has a Countryside Stewardship Agreement that starts after January 2021, who gets offered a new Environmental Land Management Scheme, will be able to withdraw and transfer to the new scheme with no penalty. Therefore anyone considering applying for a new Countryside Stewardship agreement in 2021, it is worth looking to see what options are out there. I hasten to add as a firm we have put together some wonderful Countryside Stewardship agreements that have provided significant additional incomes but also large capital investment that has improved farm infrastructure considerably.

If you would like to discuss any aspect of the changes to farm subsidies or applying for a countryside stewardship agreement please get in touch or pop into our office when you are next in Exeter Livestock and we would be happy to discuss the options available in further detail.

Written By Claire Quick BSc (Hons) MRICS FAAV of Kivells

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