The RPA plans to replace the BPS in England with delinked payments in 2024. The RPA will pay delinked payments each year from 2024 to 2027. The amount you receive will decrease each year as the RPA applies progressive reductions, with 2027 being the last year of delinked payments.
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.
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
Reference data and reference amount – what do they mean?
Reference Data: This is the adjusted payment total of your BPS claims from 2020, 2021 and 2022.
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
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.
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 information statement
The RPA has also started to send out information statements. The final batch of these will be in mid-December for hardcopies. This batch will include those without suitable email addresses and will capture all remaining accounts who have not yet received an email copy.
If you are expecting an information statement, either digitally or as a hard copy, and have not received one by late December, then the RPA asks that you contact them to have this investigated and resolved.
If a revision needs to be made to an information statement, then an updated copy is expected to be circulated in January 2024.
These statements will 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 will not be issued on a geographical basis. If you have not received one by early December and believe that you should have done, please contact the RPA. For businesses without an email, statements should arrive from mid December through the post.
There are four types of information statements. Which one(s) you receive will depend on your individual circumstances. Each statement will have different wording. The RPA asks that you check the information statement and raise any queries with them by the dates set out below:
- Information Statement 1 will be for those who have existing reference data from 2020-2022 reference period and submitted a valid BPS claim in 2023.
- Information Statement 2 is for those who have existing reference data from 2020-2022 reference period but did not submit a valid BPS claim in 2023.
- Information Statement 3 is for those who have existing reference data from 2020-2022 reference period and did submit a valid BPS claim in 2023, but are also an applicant on the Lump Sum Exit Scheme (submitted a valid application back in 2022).
- Information Statement 4 is for those who have existing reference data from 2020-2022 reference period and did not submit a valid BPS claim in 2023, but are also an applicant on the Lump Sum Exit Scheme (submitted a valid application back in 2022).
If you claimed BPS for the first time in 2023, a separate letter will be issued to explain the delinked payments process and the options you can consider if you want to undertake a transfer of reference amount in 2024.
Deadlines: If you want to query the figures presented with the information statement you will have until 29 February 2024 to challenge them.
If you are intending to transfer some, or all, of your reference amount, the current guidance recommends having all of your contact details up to date and any queries submitted to the RPA by 31 December 2023.
The warm up communications will be sent to the email account with full business permissions on your account, while the information statement will be sent to the email account listed under your business contact details. If you need to update either details, the RPA has the following two videos to support you doing this:
Transfer window: From 15 February – 10 May 2024, you can choose to transfer some or all of your reference data to another business. The scheme guidance explains more about when you can transfer out your reference data to another business, and we will tell you how to do this later in the year.
Delinked payments – what we know
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 will begin circulating an information statement. This will outline 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.
The RPA will tell you how to do this, and the information you will need to provide later in 2023. You cannot ask the RPA to transfer the reference amount until probate and administration letters have been provided.
Where land has been inherited by multiple businesses, each individual business can ask the RPA to transfer a proportion of the reference amount to them. Where multiple requests are received for the same reference amount, these must not exceed the total of the reference amount from the farmer who has passed away.
If you make a request after the RPA has made a delinked payment to the original business, it will take the request into account for any future Delinked Payments which are due. A transfer request can be made for inheritance until the end of 2027.
If you inherit land after 15 May 2023 (the deadline for BPS 2023) then you do not need to have claimed BPS in 2023. If you inherit land with a sitting tenant before May 15 2023 and the land was still let to the tenant on the 15 May, you do not need to have claimed BPS in 2023.
The RPA has stated that if a sole trader dies and an executor or administrator has been appointed then this will be treated as the same business. Delinked Payments will be paid once the RPA has been sent a grant of probate or letters of administration.
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. More information on this is anticipated ahead of this window opening.
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.