DEFRA have published the outcome of the consultation process into the proposed Lump Sum Exit Scheme for farmers in England and confirmed that they plan to go ahead with the scheme in 2022.  The aim of the Lump Sum Exit Scheme is to allow those wishing to retire or leave the industry early, to do so in a planned and orderly way and help create wider opportunities for the next generation.

And in looking at the initial detail, “whether the Lump Sum Exit Scheme is worth considering will depend very much on the individual circumstances of the business,” is the message from David Morley  Head of Conservation & Environment from H&H Land & Estates. 

Here David Morley gives us a breakdown of the key points of the scheme.

“The lump sum payment will be based on a payment worth 2.35 times the amount of the average of the previous three years Basic Payment (BPS) claims, from 2019-21, but will be capped at £100,000. Applications will be open between April and September 2022. The applicant must have claimed BPS in 2018 or earlier to be entitled to apply.

To claim the lump sum, the farm business involved will need to surrender their BPS entitlements and will not be able to claim any further direct payments or enter Countryside Stewardship or apply for the Sustainable Farming Incentive. As a result of the consultation, there will be more flexibility for partnerships than was originally proposed. Where a partner wishes to retire, they can claim the lump sum if they have at least a 50% interest in the partnership. The same applies if more than one partner wishes to retire and their combined interest is at least 50%. Those partners who continue to farm will be allowed to enter other land management schemes, but not claim BPS.

To be eligible for payment, applicants will need to transfer their land by selling it, renting it out or surrendering a tenancy by 31^st May 2024. If an owner-occupier chooses to rent out their land, it must be on a Farm Business Tenancy of at least 5 years. The applicant can choose to retain up to 5 ha of agricultural land for their own use or any land that is planted with trees through a Woodland Creation scheme. Any common rights, whether linked to land or held in gross, will also need to be transferred out.

In recognition of the fact that it may take a couple of years to complete the necessary arrangements for leaving the farming industry, DEFRA has said it will allow farmers to continue to claim BPS in parallel with the lump sum exit scheme. The lump sum paid will then be reduced by any BPS payments made. It would seem to be a wise move to apply for both in parallel, in case it is not possible to complete the necessary land transfers to meet the requirements of the lump sum exit scheme.

So for anyone contemplating applying for the Lump Sum Exit Scheme, I would strongly recommend that you take professional advice to make sure it is the best course of action for your individual circumstances.”