BPS 2022: how it relates to lump sum, delinked payments and SFI

14 April 2022

Farm business Agricultural Transition Plan
Farm house, fields and trees in lush green countryside

As the farming scheme landscape begins to clear, our business team highlight the relationships between BPS 2022, lump sum, delinked payments and SFI schemes. Read on to find out more.

With finalised Sustainable Farming Incentive and Lump Sum Exit Scheme information now starting to be published, it is important to consider how these schemes interplay with claiming BPS in 2022.

There are links between these new schemes and other exiting schemes not mentioned below. These are set out in the relevant guidance from GOV.UK.

Complete the BPS 2022 claims on time

It is important to complete the BPS 2022 claim before the 16 May 2022 deadline correctly and in line with the rules that have been published. A summary of these rules can be found on our Find out all you need to know about BPS 2022 page. However, it is also important to understand the relationship between BPS and new schemes that are appearing from this year.

NFU activity

The NFU has urged Defra and the RPA to ensure when they are developing new schemes, they work through the implications for existing schemes in order to help farmers navigate through the support scheme landscape

The scheme landscape will for the next few years be more crowded than in recent years.

Lump Sum Exit Scheme

The RPA is offering English BPS applicants who wish to exit the industry (retire or take up a different occupation) the option of applying for a lump sum payment in 2022 in a planned way.

Read our briefing: on our Find out more about the Lump Sum Exit Scheme page.

The lump sum will be offered as a placement of any further direct payments (whether under BPS or forthcoming delinked payments) to the recipient during the remainder of the agricultural transition.

The application window for the lump sum opened on 12 April and will run to 30 September 2022. This means it will be open beyond the BPS 2022 application window that runs to 16 May 2022 (or 10 June 2022 with late application penalties). Understanding the rules of both schemes now if applying for both this year.

Essentially to receive a lump sum, there is a range of eligibility criteria on both the farmer and also what they have to do with the majority of the agricultural land that was at their disposal on the 17 May 2021 (the 2021 BPS claim deadline). Definitions of agricultural land are the same as for BPS, with such land mainly used as non-agricultural activity not being included in the definition for this exit scheme. The lump sum scheme does not have any rules about what the occupier does with any land they are allowed to keep; except they cannot use it to claim future BPS or delinked payments or claim under certain other schemes.

The RPA are urging those wishing to apply for the Lump Sum Exit Scheme to also apply for BPS 2022. 

This is to protect the farmer applying for the lump sum exit payment if they then find that they are either not eligible for the lump sum (for example, if they apply for the lump sum after the BPS 2022 claim window closes) or cannot complete the transfer out land in time. 

There is no double claim by the farmer in doing this, as the BPS 2022 payment will be netted off the Lump Sum Exit Scheme payment if they later meet the rules of the Lump Sum Exit Scheme.

If a protective BPS claim is made in 2022 where a Lump Sum Exit Scheme is also applied for, then the farmer needs to continue to meet the BPS 2022 scheme rules, such as having BPS eligible land at their disposal and holding entitlements on 16 May.  If a farmer gives the entitlements or land up after this date, it will not affect their BPS 2022 payment so long as they meet the BPS scheme rules.

To claim BPS 2023, a farmer would also need to hold entitlements and eligible land on 15 May 2023 (if next year is also claimed under BPS as a protective claim alongside the lump sum scheme).

Therefore, timing of when the eligibility for lump sum is critical if the protective BPS claim is also being made, as you cannot do the latter without land or entitlements. 

It is also the BPS claimant’s responsibility to ensure BPS claimed land remains eligible for the entire year and meets cross-compliance rules where applicable. Please do read the BPS rules on this on the GOV.UK website – Basic Payment Scheme 2022 - Rules for 2022 - Guidance.

Please note: a lump sum exit scheme applicant who is connected to a separately recognised BPS claiming business that is not claiming the lump sum, then that separate business is not affected by the lump sum rules of not being able to claim BPS or delinked payments in the future.

If a farmer changes their mind after applying for the lump sum, they can withdraw their lump sum application by writing to RPA at any time before they are paid the lump sum. This will not affect any payment made to or due to the farmer under BPS. Though a separate BPS claim would need to be made in 2022 and 2023. BPS Scheme year 2023 being a critical year to claim BPS in order to be eligible for delinked payments that replace BPS in 2024 and will operate until 2027.

Thinking about Sustainable Farming Incentive?

If you are applying for Lump Sum Exit Scheme, it would be inappropriate to apply for Sustainable Farming Incentive as SFI is a three-year land management agreement that requires land that under the Lump Sum Exit Scheme rules would have been transferred out.

Delinked payments

Less is known about the final rules for delinked payments at this time, which when BPS ends after the 2023 scheme year, will operate from 2024 to 2027. 

Delinked payments will be used to distribute the remaining direct payments due to an eligible farmer. It will replace BPS in its entirety.

What is known and is critical now in 2022 is that the delinked payment value will be based on a reference amount, which is, in turn, based on the average of the English BPS 2020, 2021 and 2022 claims (including young farmer or greening payments).

The delinked payment will be calculated each year from 2024 onwards as follows: a delinked reference amount multiplied by the progressive reductions for that year in question to arrive at the payment value will be issued. 

This means the value of the delinked payments each year will be less than the reference amount.

BPS 2022 claim is critical

The BPS 2022 claim is critical if you intend to be claiming direct payments in the form of delinked payments from 2024 onwards. It is also critical that a farmer must claim and be eligible for, BPS payments in the 2023 scheme year to receive delinked payments for 2024 to 2027.

Business changes 

There may have been business changes since BPS 2020 (the start of the delinked payment reference period) which affect the delinked payment a farmer could receive.

More details are expected on these issues, but the current information states that if a business has been given a new SBI, they will normally treat it as a new business that cannot benefit from the BPS claim history of a previous business from the reference period.

This means Defra will not take account of the previous business BPS claims when calculating the reference amount. However, there are exceptions for business mergers, business splits and inheritance cases; we await the detail on these issues.

Sustainable Farming Incentive

The RPA stated in the BPS guidance ‘that farmers who are eligible for BPS will be eligible to apply for Sustainable Farming Incentive (SFI) in 2022. You can claim BPS and SFI on the same land parcel, provided that land parcel meets the relevant eligibility rules under both schemes.’ 

Clearly, reading the SFI guidance is now key, especially with the BPS application window running to 16 May and the SFI rolling application window not expected to open until June or thereabouts.

It is important to note that we do not have all the SFI 2022 information, such as how the application process and details around that will work. The current information on SFI 2022 can be found on GOV.UK's Sustainable Farming Incentive guidance page.

BPS, mapping and claims

So, what does the published SFI guidance tell us about BPS, mapping and claims. It states:

To be eligible to apply for an SFI 2022 standards agreement in 2022, the business (the SBI) that is applying for SFI must be eligible for BPS. This means the SBI must have at least 5 hectares (ha) of BPS eligible land and 5 or more BPS entitlements on 16 May 2022.

The business does not need to claim BPS in 2022 or to have received BPS payments in the past; this rule is simply to limit applicants to those who are eligible for BPS. The main difference however from BPS for SFI 2022 is that common land needs to be applied for separately under SFI compared to the current arrangements under BPS. Please refer to the SFI 2022 rules on common land.

SFI 2022 will use the core mapping information held on Rural Payments to inform SFI land eligibility. Therefore, it is in your interest to ensure your maps are correct when submitting your BPS claim.

In terms of land covered by an SFI 2022 application, the land cover (as per the details on the Rural Payments online service mapping) needs to be correct, as is the case now for BPS 2022. This is because the SFI 2022 standards are only available on certain land covers to be eligible to enter into an agreement on.  

The SFI 2022 guidance does state: A land parcel’s registered land cover must be compatible with the land use you declare for that land parcel in your BPS application. For example, if the land use is temporary grassland, the registered land cover must be ‘Arable land’. This is to avoid BPS claim processing issues later this year.

To update land cover, the RLE1 process, details found on the RLE1 form and guidance - GOV.UK (www.gov.uk) page will need to be followed. 

It is important to look at the online mapping now ahead of making a BPS 2022 claim and a later SFI 2022 application in order to check the land cover for the parcels as well as the permanent boundaries are correct.

If needed, it will be possible to update land cover later in the year using the RLE1 process, but please bear in mind this relationship with the BPS 2022 claim.

Also, land as part of an SFI 2022 agreement needs to be linked to the SBI that is claiming it and eligible for BPS.

To claim SFI on land, the land needs to be under the management control of the applicant for the 3-year duration of an SFI 2022 agreement. Please read the details in the SFI 2022 guidance on this subject.

It should be noted that under SFI 2022, you cannot have two parties claiming on the same land at the same time under different schemes. For example, a tenant claiming BPS and the landowner claiming SFI 2022, this is referred to as dual use.

Finally, if you want to claim support for the SFI 2022 annual health and welfare review element, to be eligible for funding in addition to the BPS based eligibility criteria set out above, a farmer needs to be a livestock keeper with more than any of the following: 10 cattle, 20 sheep, 50 pigs and this livestock must be registered in England.

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