Delinked payments: replacing the Basic Payment Scheme

The Rural PaymentPayments Agency (RPA) plans to replace the Basic Payment Scheme (BPS) in England with delinked payments in 2024.

The 2023 scheme year will be the last year of BPS.

The scheme rules will endbe afterset theout 2023in schemenew year.regulations RPAwhich plansare expected to makecome delinkedinto paymentsforce eachby yearthe fromend 2024of to2023, 2027.following parliamentary approval.

WhenYou payments are delinked, you will not need any land or entitlements to receive thedelinked payments.

RPA This will simplifypay thedelinked payments each year from 2024 to 2027. The amount you receive will decrease each year as theywe apply progressive reductions. This is explained in ‘How delinked payments are phasedcalculated’. out2027 bywill be the endlast year of 2027.delinked payments.

WhenCheck youif canyou’re claimeligible for delinked payments

DelinkedTo paymentsreceive willdelinked payments, you must:

• be basedeligible on- yourthis means you must claim, and be eligible for, BPS payments in England in the 2023 scheme year (except for some inherited land). Read the BPS rules for 2023 for information about eligibility for BPS.
• have a reference amount

Your reference amount will normally be your average BPS payment in the reference period, which is the BPS 2020 to 2022 scheme years. If you did not claim BPS in the reference period, you will only have a reference amount if BPS reference data has been transferred to you.

Your BPS 2023 claim does not need to be for the same amount of land, or for land in the same part of England, as you claimed in the reference period.

Your BPS 2023 claim needs to be for at least 5 eligible hectares, with 5 BPS entitlements in the same BPS payment region as the land.

So long as you are eligible for delinked payments, the value of your payments for 2024 to 2027 will not be affected if your farm size changes, or if you change what the land is used for, after BPS 2022.

You can receive delinked payments even if you choose to stop farming.farming after the BPS 2023 application deadline (15 May 2023).

You mustwill claim,not and be eligible for,for BPSdelinked payments inif theyou 2023have schemereceived yeara topayment receiveunder the Lump Sum Exit Scheme.

Receiving delinked payments

You forwill 2024not need to 2027.apply to receive delinked payments.

YouLater canthis alsoyear, applywe forwill anysend othera schemestatement for you areto eligiblecheck, for,showing includingyour ourreference environmentalamount landbased managementon schemes.

Whenthe youreference cannotdata claimwe hold for you at that time. We will use your reference amount when we calculate your delinked payments

each year.

YouContact cannotRPA applyby foremail delinkedor paymentspost ifas yousoon haveas receivedpossible aif paymentyou underdo thenot Lumpwant Sumto Exitreceive Scheme.a delinked payment.

How delinkedreference paymentsamounts are calculated

Your delinked payments will be based on a ‘reference amount’.

This iswill differentbe tothe average of the referenceBPS amountpayments usedmade to your business for the LumpBPS Sum2020, Exit2021 Schemeand as2022 itscheme usesyears. aThis differentincludes referenceany period.young farmer payment or greening payment.

TheYour delinked payments reference amount will be theadjusted averageif BPS paymentsreference (includingdata anyhas youngbeen farmertransferred paymentto or greeningfrom payment)your madebusiness.

We towill add up your businessBPS payments for the BPS2020, 2021 2020,and 2022 BPSscheme 2021years and divide by 3. We will divide by 3 even if no BPS 2022payment was made to you for one or more of these 3 scheme years.

RPAWe will include reductions applied for over-claiming land,land.

We but will ignorenot the following:include:

• over-claim penalties (which can be applied to BPS payments on top of over-claim reductions)
• reductions and penalties for not meeting the greening rules
• late application penalties
• penalties for not declaring all agricultural land parcels
• cross compliance penalties
• reductions to amounts above €150,000
• progressive reductions for BPS 2021 and BPS 2022
• amounts intercepted from your BPS 2020, 2021 or 2022 payments due to overpayments for other scheme years or other schemes

If you received a manual payment for BPS 2020, 2021 or 2022, this will be included in your reference amount.

If you also claimed BPS on entitlements in Scotland, Wales or Northern Ireland, your reference amount will be based only on the part of your payment which relates to your English entitlements. Payment schemes in Scotland, Wales or Northern Ireland will operate under the rules set by the relevant UK administration.

How delinked payments are calculated

RPAWe will apply progressive reductions when itwe calculatescalculate your delinked payments each year. This means the value of the delinked payments will become a smaller proportion of the reference amount each year.

Use the progressive reductionreductions calculator to see how thisprogressive affectsreductions you.

may affect your payment for the 2024 scheme year. Different progressive reductions will be applied for years 2025 to 2027 as delinked payments are gradually phased out. These reductions have not been announced yet.

ThisWe meansplan theto valuemake ofyour the delinked payment in 2 instalments each year will- becomean aadvance smallerpayment andof smalleraround proportion50% offrom August with the referencebalance amount.payment from December.

RPAIf BPS willreference data was used to calculate youra payment under the Lump Sum Exit Scheme, it cannot also be used to calculate a delinked paymentpayment. eachWe yearwill ascontact follows:farmers who are affected by this.

If you have used the land to claim BPS reference2023, datait wasis usedyour responsibility to make asure paymentthe underland:

• stays eligible for BPS for the Lumprest Sumof Exitthe Scheme,year or is withdrawn from your BPS application
• meets the cross compliance rules for the whole year (unless the person you have transferred it to applied for any rural payments, in which case they take over this responsibility)

If you transfer in land after 16 May 2022, this will not alsoincrease beyour usedreference amount.

You can choose to maketransfer ayour delinkedreference payment.amount to another business.

Business changes since BPS 2020

There may have been changes to the structure of your business since you were paid BPS 2020 (the startfirst year of the reference period) which affect the delinked paymentpayments you could be eligible to receive. These changes could affect whether:

• you meet the requirement to have claimed BPS in 2023
• the BPS 2020 to 2022 payments of a previous business can be included in the calculation of your reference amount

IfThis means you may want to ask us to transfer out your reference amount to a new business. The new business hasmust have claimed, and been giveneligible for, BPS 2023 to receive delinked payments (except for some inherited land cases). For example, you may want to transfer your reference amount if your business has:

• a new Single Business Identifier (SBI),(SBI)
• been RPAmerged
• been split

New business

If your business has been given a new SBI, we will normally treat it as a new business which cannot benefit from the BPS claim history of a previous business. This means RPAwe will not consider the previous business when calculating your reference amount. There are exceptions where reference amount has been transferred to you.

Inherited land

If you inherit eligible land in England after 15 May 2020 from a farmer who has died and who claimed BPS in one of the years from 2020 to 2022, you can ask us to transfer all or part of their reference amount to you. We will tell you how to do this, and the information you need to provide, later this year. You will not be able to ask us to transfer any of the reference amount until probate or letters of administration have been granted.

Eligible land means the same as for BPS.

If land has been inherited by more than one business, each of these businesses can ask us to transfer some of the reference amount. If we receive more than one request to transfer any of the reference amount, the transfers requested must not total more than the reference amount of the farmer who has died.

If you make a transfer request after we have made a delinked payment to the original business, we will take the request into account for any future delinked payments which are due. You can make a transfer request for inheritance until the end of 2027.

If you inherit the land after 15 May 2023 (the BPS 2023 application deadline), you do not need to have claimed BPS in 2023. If you inherit land with a sitting tenant before 15 May 2023 and the land was still let to the tenant on 15 May 2023, you do not need to have claimed BPS in 2023.

If a sole trader dies and an executor or administrator has been appointed, this will be treated as the same business. Any delinked payments due will be paid once RPA has been sent a grant of probate or letters of administration.

Becoming a partnership

If the business status of a sole trader has changed to a partnership since BPS 2020, we treat this as the same business and the SBI should be the same. This means the partnership can use the BPS claim history of the sole trader for delinked payments.

If 2 or more businesses merged to form a partnership, reference amounts from the previous businesses can be transferred to the new partnership’s SBI.

Other changes to the legal status or ownership of your business

If there has been a change to the legal status or ownership of your business, you may have been given a new SBI. For example, this may be the case if a partnership has become a limited company. If you have been given a new SBI, we will normally treat it as a new business which cannot benefit from the BPS claim history of a previous business. This means we will not consider the previous business when calculating your reference amount. There are exceptions where some or all of the reference amount is transferred to you.

Business structure changes after 15 May 2023

If your business structure changes after 15 May 2023 (the BPS 2023 application deadline), we will still make the delinked payment to the SBI which claimed BPS 2023 (except for some inherited land cases).

You can change the bank account we use to pay you at any time. You should complete an IACS 26 or IACS 27 form if you are claiming, or planning to claim, under our other schemes.

When you can transfer out your reference amount to another business

You can transfer all or part of your reference amount to another business or businesses. For example, you might want to do this if, since BPS 2020, your business has merged or split, your SBI has changed or you have passed some or all of your farm to someone else. There are exceptionsspecial rules for inherited land.

To transfer your reference amount, you will need to tell us how much of your BPS 2020 to 2022 reference data you want to transfer. You will be able to do this during a transfer period in early 2024. We will tell you how to do this later this year.

The ‘reference data’ is the BPS 2020 to 2022 payments (before some reductions and penalties). The ‘reference amount’ is the sum of the reference data divided by 3.

It is up to you if you want to transfer any of your reference data. We will not get involved in disputes between you and another business. You may want to seek professional advice before transferring any of your reference data.

You can choose how much of your reference data to transfer. You cannot transfer more than the total value of your reference data. You do not need to have claimed BPS 2023 to be able to transfer your reference data. To receive delinked payments, the business mergers,receiving the transferred reference data must have claimed, and been eligible for, BPS 2023 (except for some inherited land cases).

You cannot transfer your reference data if you have applied under the Lump Sum Exit Scheme (unless you have withdrawn your application).

In some cases, you can only transfer your reference data if eligible land in England was transferred from the business splitstransferring out the reference data to the business receiving the reference data. The transfer of land must have happened after 15 May 2020 and inheritancebefore cases.16 May 2023. A transfer of land is needed where you:

Tax

• have treatmenta reference amount of more than £30,000 and the transfer is for delinkedonly payments

part of your reference data or is to more than one business - this rule is to stop reference data being artificially split between businesses to reduce the progressive reductions that apply

want to transfer out reference data that has been transferred to you from another business

want to transfer reference data from a business where the SBI has been closed - the SBI will be shown as ‘locked’ on the Rural Payments service and we will have written to the business to tell them we have closed the SBI

WhereIn most cases we should already have evidence showing the land transfer. We will ask you for other evidence of the land transfer if we need it.

Eligible land means the same as for BPS.

Types of land transfer

If you were the owner-occupier of the land, the transfer can be by sale, gift or renting it out under a Farm Business Tenancy or Agricultural Holdings Act 1986 tenancy (or equivalent). This includes where you restructured your business isand inby receipt15 May 2023 the land was at the disposal of the new business for claiming BPS.

If you were the tenant, the transfer can be by:

• surrendering the tenancy to your landlord or you (or your landlord) ending the tenancy having served a Notice to Quit
• the tenancy expiring
• assigning the tenancy (transferring it to someone else)
• succession - if you had an Agricultural Holdings Act 1986 tenancy with succession rights

Examples of transferring reference amount

Retiring farmer

A farmer (Business A) claimed BPS in 2020 and 2021 and then left farming. Business A did not apply under the Lump Sum Exit Scheme. Business A transfers their farm to Business B who then claims BPS in 2022 and 2023. This means:

• Business A will not be eligible for delinked payment,payments
• if thesewe have not closed the SBI for Business A, Business A can ask us to transfer their BPS 2020 and 2021 reference data to Business B (or another business). If we have closed the SBI for Business A, Business B can ask us to transfer the reference data from Business A because the land transfer rules have been met

New farmer

Business A transferred in some land from Business B at the end of 2022 and then claimed BPS for the first time in 2023. Business B had claimed BPS in 2020, 2021 and 2022. This means Business A will continuenot receive any delinked payments unless Business B or another business asks us to betransfer taxedreference data to Business A.

Split business

Business A claimed BPS in line2020 and then split into 2 businesses, each with ongoinga new SBI (B and C). We closed the SBI for Business A. Business B and C each claimed BPS in 2021, 2022 and 2023. This means:

• when calculating the reference amount for Business B we will take account of the BPS 2021 and BPS 2022 payments made to that business. The equivalent applies for Business C
• Business B and Business C can each ask us to transfer some of the BPS 2020 reference data from Business A if the land transfer rules have been met. The total reference data transferred must not be incomemore than the BPS 2020 reference data for Business A

Merged business

Business A and Business B each claimed BPS in nature.2020 and merged to form one business. The merged business claimed BPS in 2021, 2022 and 2023 using the SBI for Business A. We closed the SBI for Business B. This means:

• when calculating the reference amount for Business A, we will take account of the BPS 2020, 2021 and 2022 payments made to that SBI
• Business A can ask us to transfer the BPS 2020 reference data from Business B because the land transfer rules have been met

CrossTax compliancetreatment for delinked payments

Where a business receives delinked payments, these will be taxed as ‘income’.

Cross compliance

The willvast notmajority applyof our strong legal standards for the environment and animal health and welfare, which farmers currently have to meet for cross compliance, will continue. We will enforce these in a proportionate and fair way.

However, there will be no link between these rules and your delinked payments.

ThereWe isare making it easier for farmers to find which rules apply to them. You can now see all the rules in one place on the Rules for Farmers page.

Applying for other schemes

You can also apply for any other scheme you are eligible for. If you’re a regulatoryfarmer, baselineland manager or forester, read Funding for farmingfarmers withinand domesticland legislation,managers whichfor safeguardsinformation ourabout opportunities to apply for money to improve the environment and protectsyour farm’s productivity. You can keep up to date with scheme news by reading the healthRural ofPayments animals,Agency plantswebsite and people.the Defra Farming blog.

MostIf ofyou theclaim standardsunder inour crossother complianceland-based willschemes, continueyou toshould applykeep your land data up to date by checking your farmdigital activitiesmaps asin theythe Rural Payments service. Not doing so could affect your payments under any existing schemes you are alreadypart legalof requirements.and future schemes you enter into.

RPA

Planned high-level timetable

2023

• You must claim, and be eligible for, BPS 2023 (except for some inherited land cases)
• We will makeissue surean farmersinformation arestatement, awareshowing ofyour thesereference legislativeamount requirementsbased ason the reference data we approachhold at that time

2024

• You andcan transfer some or all of your reference amount to another business during a transfer period
• Delinked payments will be workingmade in 2 instalments each year

We plan to reformmake advance payments of around 50% from August with the waybalance itpayments regulatesfrom them.December. The payments will be paid each year from 2024 to 2027.

We will provide a more detailed timetable as plans develop.

ContactWhere usto find more information

Email: ruralpayments@defra.gov.uk and put ‘Delinked payments’ in the Subject heading.

Telephone: 03000 200 301

Follow us on Twitter @Ruralpay