Defra has published updated guidance regarding farms that have recently been sold.
New Defra guidance
From 2024 Basic Payment Scheme payments will be delinked which means that new farm owners will not need to apply for BPS, instead this will be calculated based on the farmers BPS receipts from 2020, 2021 and 2022 as these receipts can be transferred to the new owner.
However, eligibility requirements mean that the farmer will need to have claimed Basic Payment in 2023 on more than 5 hectares of land.
Previous guidance stated that when a farm had been transferred during or after the reference period and the seller failed to claim in 2023 the previous claim history would be lost. However, the new guidance states that all or part of the reference can be transferred to another business. Exceptions to this include if they have claimed the Lump Sum Exit Scheme if the receiving business made a valid BPS claim in 2023. This does not apply if the land was inherited.
Furthermore, Defra have confirmed that these changes may also be applicable to those that have changed the structure of their business since BPS 2022. For example, those that have merged or split businesses, or have incorporated, entered a partnership or have changed their Single Business Identifier (SBI). Details regarding this are not yet available but Defra has confirmed that there will be a transfer period in early 2024.
If you have any questions regarding the contents of this article please do not hesitate to get in touch.
How can we help?
At Hawsons our dedicated team of specialist agriculture accountants understands that farming isn’t just a business; it’s a way of life.
The rural and agriculture sector is a specialist sector, with unique practices and conventions. We act for a significant number of arable farms and assist farming families in many matters specific to agriculture and farming. This includes tax, will planning and succession planning.
We have been able to assist our farming clients to add value to their businesses. We have advised on the financial and tax consequences of property development, green technologies and capital allowance planning. In particular, we can assist in the area of capital taxes planning. This is a significant issue for farmers following the increase in land values and the availability of development opportunities.
Dan Wood
Partner, Doncaster
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