Delinked payments are the way the RPA in England will issue direct payments between 2024 and 2027. They replaced BPS, which ended in 2023.
Warm-up communications were circulated in November 2023, explaining the transition away from BPS, as well as information statements were issued in November and December 2023 explaining what an individual business’ reference amount is and therefore what delinked payments will be based on.
As with BPS, these payments will continue to be subjected to progressive reductions until 2027.
To receive delinked payments, you must:
- Be eligible - this means you must claim, and be eligible for, BPS payments in England in the 2023 scheme year (note there is an exception for some inherited land situations).
- Have a reference amount.
The reference amount will normally be the average BPS payment in the reference period, which is the BPS 2020 to 2022 scheme years. If you did claim in 2023, but did not claim BPS in the reference period, you will only have a reference amount if BPS reference data has been transferred to you.
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 the 16 May 2022, the BPS 2022 application deadline (the last year of the reference period).
For example, where your tenancy comes to an end and the land goes back to the landlord. You will still need to have claimed, and been eligible for, BPS 2023 to receive delinked payments. If you transfer in land after 16 May 2022, this will not increase your reference amount.
You will not be eligible for delinked payments if you have received a payment under the Lump Sum Exit Scheme.
This move to Delinked Payments only applied in England and to English based BPS claims.
There was a letter explaining the process for new BPS claimants in 2023, and how you will be impacted by the transfer window.
Information on related direct payment activity:
- Read more about the Lump Sum Exit Scheme on our web page: Find out more about the Lump Sum Exit Scheme
BPS query and appeals deadline
If you wanted to query the figures presented with the information statement you had until 29 February 2024 to challenge them, unless the information was communicated to you after 1 January 2024, in which case there will be 60 days from the date of communication to challenge or query the figures.
Reference data and reference amount – what do they mean?
It's important to understand the terms that the RPA use in connection to delinked payments. These include:
Reference Data: This is the adjusted payment for your BPS claims from 2020, 2021 and 2022.
Reference Amount: This is the average of your adjusted BPS claims from 2020, 2021 and 2022 and used as the basis on which a delinked payment is made, following the application of progressive reductions to your reference amount.
Reference Period: The reference period is the BPS 2020 to 2022 scheme years. If you did not claim BPS during this period, you will only have a reference amount if BPS reference data has been transferred to you.
Transferred Reference Data: This is when you have to transfer your reference data to another business with a different SBI.
Latest news
The transfer window for delinked payments, which went live on 15 February 2024, closed on the 10 May 2024
This was the the only opportunity for businesses to transfer their reference values between one another, while in cases of inheritance with land, a transfer can take place until 2027.
The transfer window involved an online or paper form process to submit a transfer request. Which method you use depended on the type of transfer/situation you are involved in.
A new version of the paper form remains in use for inherited land cases.
Delinked payments – a reminder and overview
Defra will replace the current BPS in its entirety (including the young farmer payment) for all farmers for the remaining years of the agricultural transition. Delinking will not be optional if you want to continue to receive direct payments. However, you can withdraw from receiving them altogether by contacting the RPA.
You will not need to apply to receive delinked payments.
In November and December 2023, the RPA circulated information statements. This outlined what the RPA believes is your reference amount for calculating delinked payments, drawn from your reference data for BPS in 2020, 2021 and 2022.
The statement is not an indicator of what you will receive, as delinked payments are subject to progressive reductions just like BPS payments. The figure stated on your statement will be the starting figure for calculating what your payments will eventually be.
If you have not received a statement but believe you should have one then it is important to contact the RPA as soon as possible.
Timescales and eligibility
Defra intends to introduce delinked payments in 2024 and the last payment will be made in 2027. Once these are paid, they will be the final direct payments made in England. The new method of payment is expected to significantly reduce the administrative burden for all involved parties compared to BPS.
Recipients will not need to continue farming, have land or entitlements, to be able to receive payments. You must have applied for BPS in 2023 to be eligible for delinked payments from 2024-2027.
How delinked payments are calculated
The calculation for delinked payments has been confirmed by Defra as follows:
Delinked reference amount x Progressive Reduction for that year= delinked payment value.
You can use the government's progressive reductions calculator to see hod this may affect your payment for 2024.
The progressive reduction amounts have not yet been announced beyond 2024. A successive government is expected to announce the reduction rates for 2025 onwards.
The progressive reductions mean that the value of the delinked payment each year will be less than the reference amount. The delinked reference amount will be based on reference data that is the average of the English BPS 2020, 2021 and 2022 claims (including young farmer or greening payments) irrespective of if only 1 or 2 of those years a claim was made in them.
The reference amount can be based on transferred reference data, allowing businesses with no reference data of their own to be able to receive delinked payments.
This is a different reference period to the Lump Sum Exit Scheme.
The basis of BPS 2020 to 2022 values will be adjusted and will ignore a range of deductions and penalties that could have been applied in that period to avoid double reductions occurring.
The RPA expect to make delinked payments in two instalments each year – an advance payment of around 50% from 1 August with the remaining balance payment from 1 December.
Business changes since 2020
Where the business changed since 2020, the RPA recognised this as there may have been changes to your business since you were paid BPS 2020 (the first year of the reference period), they gave you the option to transfer out some or all of your reference amount to another business.
For example, you might have wanted to do this if your business has merged, split or been given a new SBI since BPS 2020. You could do this during a transfer period from 15 February to 10 May 2024.
The only circumstances in which you can now request to transfer a reference amount, is if you have inherited eligible land. More information on this is set out below
Business structure changes after 15 May 2023
If your business structure changes after 15 May 2023 (the BPS 2023 application deadline), the RPA have stated they will still make the delinked payments to the SBI which claimed BPS 2023 (except for some inherited land cases).
The RPA go onto to state that you should complete an IACS 26 or IACS 27 form if you are claiming, or planning to claim, under our other schemes.
The RPA have confirmed following NFU questioning of this process that if they issue you with a new SBI, that will be used for future payments under other schemes.
The delinked payments will continue to be made to the bank account linked to the SBI which claimed BPS 2023.
The RPA have also confirmed that you can change the bank account they use to pay you at any time. For example, if a partnership ends or a limited company is wound up after it claimed BPS 2023, you can change the bank account that is linked to that SBI.
The RPA will then pay any delinked payments to that bank account. Importantly, the bank account does not need to match the original trading name of the business.
Inherited Land since 2020
The RPA state that if you inherit eligible land (as BPS) in England after 15 May 2020 from a farmer who has died and who has a reference amount, you can ask the RPA to transfer all or part of that amount to you.
If a tenant has died and their beneficiary takes on their tenancy, the RPA will treat this as an inheritance of eligible land. You will not be able to ask the RPA to transfer any of the reference data until probate or letters of administration have been granted and the estate has been settled.
The RPA go onto state that if you are the sole inheritor of the land, you can ask the RPA to transfer all the reference data from the farmer who has died. If land has been inherited by more than one person, each person can ask the RPA to transfer some of the deceased person’s reference data. A separate Delinked Payments Transfer Request form will need to be submitted for each business.
Where possible, you should all agree how you want the reference data to be split between you, before you make your transfer requests. The total sum of the reference data on the transfer requests cannot be more than the total reference data of the farmer who has died.
If you make a transfer request after the RPA has made a delinked payment to the original business, the RPA will take the request into account for any future delinked payments which are due.
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, before delinked payments end, a sole trader dies and an executor or administrator is appointed, this will be treated as the same business. RPA will need to be sent a grant of probate or letters of administration to be able to pay any delinked payments due.
The RPA will then continue to pay the deceased person’s business until the estate is settled. Once the estate is settled, the inheritors of the land can ask RPA to transfer reference data to their business. They will need to make this transfer request before 31 December 2027.
Inheritance without land
If someone who is eligible for delinked payments dies, but the beneficiaries of the estate do not inherit any eligible land, the Executors can ask the RPA to keep the deceased person’s SBI open.
Once probate is granted, the RPA will then continue to pay any further delinked payments to that SBI. Please note the ability to change the bank account details set out above.
Cross compliance and claiming other environmental schemes
- Cross compliance will not apply to delinked payments. However there is a regulatory baseline for farming within domestic legislation, which safeguards environment and protects the health of animals, plants and people.
- Most of the standards in cross compliance will continue to apply to farm activities as they are already legal requirements.
- The rules you need to follow can be found at: GOV.UK | Rules for farmers and land managers
Receiving a delinked payment will not disqualify the recipient from applying for payment under new schemes, including SFI (Sustainable Farming Incentive) provided you are eligible for these schemes.
Tax
- Defra has confirmed the tax position of the delinked payment as follows:
'Where a business is in receipt of a delinked payment, these will continue to be taxed in line with the outgoing BPS payments and be income in nature.’
NFU work on delinked payments
Thanks to continued pressure by the NFU, in May 2023 we managed to receive further guidance on how certain business changes might affect your eligibility for Delinked Payments and what can be done to ensure you do not lose out on any payments.
We have continued to raise a number of points with the RPA and Defra on how delinked payments will be delivered from 2024 onwards, a number of these are set out in the published RPA guidance and around how payments will be issued post the creation of delinked payments where there is business change.
The NFU over the last 2 years has raised the profile of this change from BPS to Delinked Payments with members, through a combination of online and hardcopy articles, and a series of member webinars.
The 2021 consultation – a quick reminder
A 12-week consultation opened 18 May 2021 seeking industry views on the lump sum exit scheme and delinked payments.
The consultation included a series of questions about the proposed lump sum exit scheme including eligibility criteria and aspects of how Defra should calculate the value of the lump sum.
In terms of delinked payments, it sought views on:
- the reference period to be used to determine eligibility for delinked payments
- how to calculate the value of payments.
The NFU consulted widely with membership, engaging with some 2,500 members across various activities to help develop our consultation response.
The initial scheme information was published on 8 February 2022: Lump Sum Exit Scheme (www.gov.uk).
The RPA manages both the Lump Sum Exit Scheme and the delinked payments scheme.