Warm-up communications were circulated at the end of last year, explaining the transition away from BPS, as well as information statements 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).
- 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.
You should have also received 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 went live on 15 February 2024.
It will continue to run until 10 May 2024 and will be the only opportunity for businesses to transfer their reference values between one another, while in cases of inheritance, a transfer can take place until 2027.
The transfer window involves an online or paper form process to submit a transfer request. Which method you use depends on the type of transfer/situation you are involved in.
There is specific guidance on the government’s website covering both, which we have summarised on this page.
This is the second stage of the delinked payment process and builds upon the activity undertaken throughout the latter half of 2023.
On 31 October, the RPA sent a warm up email with advice on the upcoming delinked payments process.
This email has been sent to the email account listed as having full business permissions on the RPA’s systems. This can also include agents depending on the arrangements. Email failures, and those who do not have a business email address, will receive a letter distributed by the RPA from 7 November onwards.
During November and December the RPA issued via email (and in hard copy via post) delinked payment information statements to those who had claimed BPS in 2020, 2021 and 2022 showing their reference data and in turn their reference amount.
If you’ve not received any communications on delinked payments, this will be because you have either received a Lump Sum Exit Scheme payment or have not claimed BPS for all the years 2020 to 2023 inclusive.
The transfer window
During the transfer window period, businesses can choose to transfer their reference data to another business, increasing their reference amount and in turn the delinked payment values for the remainder of the transition period.
The process of completing a transfer depends on several circumstances; in most cases an online transfer request will be suitable, however, there are certain scenarios where a paper-based transfer will need to be completed.
Submitting a transfer request online will be the most common means by which transfers are made. To action this, the RPA will need the details of the business currently holding the reference data, known as the transferor, the details of the business wanting the value, the transferee, and the amount of reference data wanted to be transferred.
This will be the process for almost all transfers, apart from the following exceptions:
- Where a business wishes to request a transfer of reference data from a closed (or locked) business.
- Where a transfer request is made concerning inherited land.
- Requesting the transfer of reference data from a business whose SBI is not locked but where you are unable to contact the intended transferor.
- Requesting the transfer of reference data that will be transferred to you from another business (but you are unable to transfer online as the transfer to you has not yet been completed – farmer 1 to farmer 2 (you) and then onto farmer 3)
- There are unresolved issues affecting your BPS 2020, 2021 or 2022 reference data.
- You want to request transfer of reference data from an SBI (sole trader) that is awaiting grant of probate.
Customers who are not able to access the internet are advised to contact the RPA and they will assist with a transfer request; however, they must be contacted before 10 May 2024.
Find out more about the transfer window at: GOV.UK | Delinked payments: replacing the BPS.
You can access the transfer request form at: GOV.UK | Delinked payments: transfer request form.
Evidence of land transfer
In certain cases, a transfer will only be actioned if eligible land in England was transferred from the transferor business to the transferee business.
This transfer must have happened after 15 May 2020 but before 16 May 2023. A transfer will be needed in circumstances where:
- A reference amount of more than £30,000 is to be partially transferred to more than one business. This rule is to prevent reference data from being artificially split between several businesses to reduce the progressive reductions that will apply.
- Where a business wants to transfer out reference data that has been transferred to them from another business, such as from Farmer A to Farmer B and then onto Farmer C.
- Where a business wants to transfer reference data from a locked SBI, they will have been contacted by the RPA confirming their SBI is closed.
In most cases the RPA should already have evidence showing the land transfer, however the RPA can ask for other evidence of the land transfer if they need it.
The definition of eligible land is the same as it was for BPS.
Land transfers can take on several forms. If the farmer was an owner-occupier, then they can transfer the land by sale, gift or by renting it out under a Farm Business Tenancy or Agricultural Holdings Act Tenancy, or equivalent measure. This includes where a business was restructured and if, by 15 May 2023, the land was at the disposal of the new business for claiming BPS.
For tenants, transfers can be through the following:
- Surrendering the tenancy to the landlord, or you (or your landlord) ending the tenancy by serving a Notice to Quit.
- The tenancy expiring.
- Assigning the Tenancy (transferring it to someone else).
- Succession – if you had an Agricultural Holdings Act 1986 Tenancy with succession rights.
Transferring from a ‘locked business’
As with inherited land cases, you will need to make a paper-based application. You will need the SBI of both businesses, their business names, and the business addresses.
You’ll also need to know the amount of reference data being transferred, whether this is a whole transfer, with the transferee receiving the entire reference amount from 2020-2022, or as a proportion of the total reference amount belonging to the transferor. This will be as a figure in sterling, and not a percentage of the reference amount.
You may also need to provide evidence of a land transfer as mentioned above.
Inherited land cases
For inherited land cases, there is a similar paper-based process to follow.
For BPS eligible land inherited after 15 May 2020, which claimed BPS between 2020 and 2022, the RPA can transfer all, or part, of the reference data to the inheritor of the land.
Where a tenant has died and their beneficiary takes on the tenancy, this will also be considered an inheritance case. A transfer, however, cannot be made until the letters of administration or probate have been granted and the estate is settled.
Making a transfer request in these cases will require a paper form, which can be found on the government’s website.
Inheritance cases do not have until May 2024 to submit a transfer request, and will be open to requests until 31 December 2027.
A separate request will be needed from each inheritor of an estate, where one estate is divided towards several businesses. It should be agreed beforehand who is applying for what proportion of the estate to avoid unnecessary delay. As always, the total sum of reference data requested cannot be larger than the estate’s reference data.
If a transfer request is made during the delinked payment process, and the RPA has paid the original business, then the request will be taken into account for any future delinked payments which are due for the remainder of the transition period.
If land was inherited after 15 May 2023, the BPS deadline, then you will not have needed to claimed BPS in 2023 in order to be eligible for delinked payments.
If land is inherited with a sitting tenant before 15 May 2023, and the land was still let to them on 15 May 2023, then this will mean you won't need to have claimed BPS in 2023.
If a sole trader dies during the transition period, before delinked payments end, and an executor is appointed, then the RPA will continue to treat that as the same business. The RPA will need to see a grant of probate or letters of administration before any due delinked payments can be made.
The RPA will continue to pay the deceased person’s business until the estate is settled, and at this point the inheritors can request to transfer the reference data to their business. This will need to be done before 31 December 2027.
The information statement
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.
If a statement showed incorrect data, then it should have been resolved by the RPA before the opening of the transfer window.
These statements show the ‘reference data’ based on BPS payments in the reference period, which is the 2020 to 2022 scheme years. The reference data determines the reference amount the RPA uses to calculate delinked payments if you are eligible – minus the progressive reductions for that year.
Statements were not issued on a geographic basis, but were issued based on SBI numbers. Each SBI would have received one of four versions of the statement. An individual with multiple SBIs active from 2020 onwards may receive multiple information statements.
Delinked payments – the basics
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.
From November 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.
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.
Business changes can also impact on your ability to access delinked payments, however thanks to continued NFU pressure, enhanced guidance relating to these changes was issued in May 2023 and is included below. This guidance will help ensure, where possible, that access to payment remains where a business has split, merged or succeeded to the next generation.
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).
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 August with the remaining balance payment from December.
Business changes since 2020
Key information:
Where the business has changed since 2020, the RPA has now published more guidance on how to manage these circumstances.
Changes to the structure of your business since 2020 (the first year of the delinked payment reference period) could affect your eligibility for delinked payments. These changes could impact:
- Whether you meet the requirements to have claimed BPS in 2023
- Whether the BPS payments from 2020-2022 can be included in the calculation of your reference amount
This may lead you to ask the RPA to transfer out your reference amount to a new business. This new business must have claimed and been eligible for BPS 2023 in order to received delinked payments. Some inherited land cases may be exempt from this.
You may wish to transfer your reference amount for any of the following reasons:
- You have been issued with a new SBI (Single Business Identifier)
- The business has merged
- The business has split
Businesses with a new SBI will normally be treated as a new business, meaning they cannot benefit from the previous BPS claim history of a previous business. This means the new business will usually not be able to rely on the previous business when calculating the delinked payment reference amount.
This is, however, subject to some exceptions.
Inherited Land
If you’ve inherited eligible land in England after the 15 May 2020 from a farmer who has died and who claimed BPS in one of the years between 2020-2022, then you can ask the RPA to transfer all or part of the reference amount to you.
Partnerships and business mergers
For businesses which have become a partnership, from being a sole trader since 2020, the RPA will treat this as the same business and the SBI should remain the same. This will allow the partnership to continue using the sole trader’s reference amount for delinked payments.
Where two or more businesses have merged to form a partnership, the reference amount from the previous businesses can be transferred to the new partnerships SBI.
Other changes to the business’ legal status
If there has been a change to the legal status or ownership of the business, you may have been given a new SBI. This can occur if the business changes from a partnership to a limited company. As mentioned above, normally the RPA will treat a new SBI as a new business, meaning new businesses cannot access the BPS claim history of the previous business. This is subject to certain exceptions.
Where these business structure changes have taken place after 15 May 2023, then they will pay the Delinked Payments to the SBI which claimed BPS 2023 (except for some inherited land cases). A farmer can change the bank account the RPA use to pay them at any time, using an IACS 26 or 27 form if they are claiming, or plan on claiming, under any other RPA schemes.
Transferring reference amounts to another business
You can transfer all or part of your reference amount to another business or multiple businesses. For example, if since 2020 the business has merged or split, its SBI has changed, or you have passed some or all of your farm to someone else, then you can submit a request to the RPA to do so.
Inheritance cases are subject to their own special rules as mentioned above.
To transfer a reference amount, you need to tell the RPA how much of your BPS from 2020-2022 reference data you want to transfer. You will be able to do this in a transfer period which is set to operate from 15 February – 10 May 2024.
Professional support
It is up to you to decide if you wish to transfer any of your reference amount. The RPA has stated that it will not get involved in disputes between parties and would urge farmers to seek professional advice and support before deciding whether to transport any reference data.
Understanding how the process will work
The following is an example which might help understand how the transfer process will work:
Farmer A wants to transfer some of their reference data to Farmer B.
Farmer A has the following BPS payments:
- 2020 £20,000
- 2021 £25,000
- 2022 £15,000
Farmer A has a reference data of £60,000 (This is the total BPS received from 2020 to 2022.) This is used to then calculate their reference amount of £20,000 (This is the reference data divided by three.)
Farmer A can choose how much of their £60,000 reference data they would like to transfer; if their transfer meets the RPA rules, then their reference amount would be recalculated based on what data they have chosen to keep.
If Farmer A chooses to transfer 50% of their reference data to Farmer B, then their new reference data amount would be £30,000. Their new reference amount would then be £30,000 divided by 3 leaving them with a £10,000 reference amount.
If Farmer A chooses to transfer £45,000, however, then their new reference data is £15,000. This is then divided by three to give Farmer A their reference amount of £5,000.
A similar recalculation would also apply to Farmer B, but this would include their existing reference data alongside any extra data being transferred to them.
If Farmer B has an existing £30,000 reference data and receives a further £30,000 from Farmer A, then their new reference data will be £60,000. This, divided by 3, will give Farmer B a reference amount of £20,000.
If Farmer B received £45,000 from Farmer A, then their new total data would be £75,000. This is then divided by 3 and gives Farmer B a reference amount of £25,000.
Rules on transferring reference data
- You can choose how much of your reference data to transfer
- You cannot transfer more than the total value of your reference data. (If your reference data is £60,000, you cannot attempt to transfer £60,001 for example.)
- You do not need to have claimed BPS 2023 in order to transfer your reference data.
- To receive Delinked Payments, the business receiving the reference data must have claimed and be eligible for BPS 2023 (except for the aforementioned inherited land cases).
- The RPA has also stated that a farmer cannot transfer their reference data if they have an existing application for the Lump Sum Exit scheme. If you wish to transfer your reference data then you will need to withdraw your application.
In some cases, you can only transfer your reference data if eligible land in England was transferred from the business transferring out the reference data to the businesses receiving the reference data. The land transfer must have taken place after 15 May 2020 and before 16 May 2023.
A transfer of land will be needed where:
- You have a reference amount of more than £30,000 and you are only transferring part of your reference data, or your reference data is being transferred to more than one business. This is to prevent reference data being artificially reduced to minimise the impact of progressive reductions that apply.
- You want to transfer reference data that has been transferred to you from another business.
- You want to transfer reference data from a business where the SBI has been closed; this will show as ‘locked'’ on the Rural Payments Service and the RPA will have written to the business informing them that it has closed the SBI.
In most cases the RPA will already have evidence showing the land transfer. The RPA will, however, ask for other evidence of the land transfer if it needs it.
Types of land transfer
If you are the owner-occupier of the land, then the transfer can be achieved by sale, gift or by renting it out under an Farm Business Tenancy or Agricultural Holdings Act 1986 tenancy (or equivalent). This includes where you have restructured your business and by 15 May 2023 the land was at the disposal of the new business for claiming BPS.
Where the farmer is a tenant the land can be transferred by:
- Surrendering the tenancy to the landlord or the tenant/landlord ending the tenancy having served a Notice to Quit
- The tenancy expiring
- Assigning the tenancy to someone else
- Succession, if the tenancy was an Agricultural Holdings Act 1986 Tenancy with succession rights
To read specific examples of how transferring reference amounts works, please visit: GOV.UK | Delinked payments: replacing the Basic Payment Scheme
Cross compliance and 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 ELMs (Environmental Land Management schemes) like the SFI (Sustainable Farming Incentive).
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 ongoing 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.
The main themes are around confidence about the information that was published and how farmers could be reassured by the information.
There has also been a lack of general awareness of the transition from BPS to delinked payments within the farming community.
We want to see as few farmers as possible impacted by the disruptive reducing profile in direct payments between 2023-2028.
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.