Further detail on Delinked Payments has been long awaited, but information has finally been published by DEFRA.
The Delinking proposals will impact all Basic Payment Scheme (BPS) applicants from 2024 onwards. You will no longer need to be actively farming your land in order to continue to claim the annual BPS payment between 2024 and 2027.
The delinked payments will be based upon the BPS reference period years, being 2020 to 2022. The average annual payment over this reference period will be used to calculate your delinked payments for 2024 to 2027, with the annual reduction then applied. This means entitlements purchased for the current 2022 BPS year will be factored into the delinking calculation.
Applicants for the delinked payment will have to submit a valid BPS claim in 2023 in order to be eligible. There will be an application process for the delinked payment claim, the details of which are yet to be disclosed.
There are other options also available to farmers, especially those leaving or retiring from the industry under the Lump Sum Exit Scheme. The two schemes however cannot be coincided, so it is vital that you ensure you do what is best for your personal circumstance.
Taxation is an important consideration when structuring future scheme income and it should be noted that delinked payments will be liable to income tax. This differs from the Lump Sum Exit Scheme, which is currently proposed to be treated as liable to capital gains tax, although further detail on this is yet to be published.
If you require any assistance with your scheme management, do not hesitate to get in contact. We cannot stress highly enough that professional advice is crucial in these matters.