Time to plan as payments are phased out
Defra and the Rural Payments Agency have plans in place to phase out direct payments in England from 2021 to 2027.
Reductions will be applied to the total payment the farmer would have been due in each year, including the total BPS payment and any young farmer payment.
However, although the same amount will be available to the farming sector in every year of this Parliament, the way this is distributed will change. The money saved from the reduction will be redirected straight back into Countryside Stewardship and other new schemes to support farming.
These progressive reductions will be made from the 2021 scheme year, paid from December 1, 2021, and then to delinked payments when these replace BPS. The current plan is to delink payments in 2024. All BPS payments will be reduced from 2021, but there will initially be bigger reductions in higher payment bands as they will work in a similar way to income tax bands.
It’s essential now more than ever to start planning your business ahead of this reduction in income. Diversifying into new streams of income will bring with it different sets of tax rules and so it is critical that you start talking to your advisors to mitigate any issues going forward.
Audrey Williams, Rural Director, WR Partners.
