Delinked payments will be replacing the BPS from 2024 onwards, and will be paid in two instalments until 2028.
The process began in November 2023 when the RPA started to send out information statements.
If no business change has occurred, then the information statement will be the only interaction you need to have with the scheme. Payments will be made automatically, and there will be no need to apply annually, as was the case with BPS.
For more information on the background to delinked payments, visit: Delinked payments – read our latest guidance. This page is regularly updated by our expert team and will help you to understand the impact these payments could have on your business in the years ahead.
If there’s anything you’re unsure about or, if you have any further questions, then NFU members can contact CallFirst on 0370 845 8458 to speak to one our Legal and Technical advisers.
1. I’ve received my letter – what next?
On 31 October, the RPA sent a warm up email/letter with advice on the upcoming delinked payments process. These might not have been sent to you directly, and could have been sent to your agent instead.
It is important to check who has an email under the full business permissions for your business. At this stage, a complete check of your existing business communication information would be beneficial, as delinked payments will not require an annual application, so ensuring your contact details remain up to date will be important.
Below are two RPA guides to support you in updating your details:
2. Understanding the information statement
Once you have considered the scheme details, the next step is to understand the information statement.
The information statement will not be being sent to the same email address as the warm up letter. Instead, your information statement will be sent to the email address listed under your business’ contact details.
The information statement will be one of four versions, depending on your circumstances. If you have claimed BPS in 2023 for the first time you will receive an information statement, but will receive a letter titled ‘New to BPS in 2023’, which will explain how the process will work.
In preparation for this, it will be useful to organise all of your BPS statements from 2020 onwards, as well as any additional documents such as those sent for manual payments and any other material which may be relevant; this is especially important for those who have had issues with their BPS during the reference period.
For those who did not claim BPS in 2020-2023 at all, you do not need to worry about delinked payments as you will be ineligible for the scheme, as will those who have received a Lump Sum Exit Scheme payment.
Lump Sum Exit Scheme applicants will be eligible for delinked payments until they choose to take a lump sum payment – a business cannot claim a Lump Sum Payment and receive delinked payments.
3. Crunching the numbers – check your reference amount
Understanding your figures is crucial to ensuring that your reference amount is correct. It would be helpful to have all of your BPS paperwork to hand.
It’s always worth double checking the reference amount you have been quoted on, as if an error has been made in your calculation it will be easier to address in these early stages rather than when a payment has been made.
It would also be helpful to have your own paperwork to hand to help the RPA investigate and resolve any issues as quickly as possible if a difference is identified.
The calculation for a reference amount is relatively straightforward, taking the gross BPS payments from 2020-2022, including any greening and young farmer payments. This sum is then divided by three, regardless of whether or not BPS was claimed in all three years. This will then be the reference amount from which your delinked payments will be drawn, subject to progressive reductions.
The crucial element at this stage is to ensure your BPS sum for 2020,2021 and 2022 is correct. The RPA will not be applying duplicate penalties, so it will be important for those who were penalised to ensure their figures match their gross BPS sum for each of the reference years.
4. Calculating your payments beyond 2024
Once you’ve calculated your reference amount, you can calculate your delinked payment figure for 2024. The progressive reductions for 2025 onwards are a political issue for the next government to decide, meaning that there is currently no way to accurately project beyond 2024.
To calculate your delinked payment, the RPA has an online calculator which can make the process relatively easy. Using the calculator, you can input your reference amount, and the calculations will show both the sum received and the progressive reductions – this will be your actual delinked payment.
The calculator will also break down the progressive reductions and the various thresholds at which they apply.
The following example is based on a reference amount of £50,000:
As you can see, the reference amount will often not be the same as the actual payment a business may receive. In this case, the reductions would equate to just over half of the reference amount.
The first stage of the calculations shows the value of each threshold for reductions, while the second table below provides the percentages being reduced for each threshold:
From these tables, it is clear that for a reference amount of up to £30,000, the applied reductions would add up to 50% of the value resulting in a reduction of £15,000.
For any reference amounts over £30,000, but up to £50,000, the reduction threshold increased to 55%. For the remaining £20,000 of the reference amount, the reduction of 55% equates to £11,000.
Collectively, there would be a reduction of £26,000, resulting in a delinked payment of £24,000 for 2024. Following the delinked payment guidance from the RPA, this would lead to two payments of £12,000 in August and December 2024.
This would be the process which would allow for relatively easy calculations to better understand how delinked payments will contribute to future farm finances, however it should be remembered that this will only be available for 2024 for the moment.
5. Transferring your reference amount
There could be many reasons why a business would like to transfer some, or all, of its reference amount. For those who have changed their business since 2020, due to either splitting the business, succession, merging with another business or becoming a limited company, it would make sense to transfer your previous business’s reference amount to your new business.
The key requirements for this are that the previous business claimed BPS during the reference period, and that the new business claimed BPS in 2023.
The RPA has provided significant guidance outlining the specific requirements for transferring reference amounts for businesses who have undergone change since 2020, with specific rules depending on the value of the reference amount being transferred.