2022 Retirement Scheme for Farmers

2022 Retirement Scheme for Farmers

Earlier today (19th May 21), DEFRA released details of their proposed retirement scheme for farmers. We've picked through the details and the main points are as follows:

When can I retire? 

The retirement scheme will be available in 2022 only. You will not claim for BPS in 2022, but will instead claim for the retirement lump sum. All entitlements will be surrendered to DEFRA as a condition of applying for a lump sum.

How much is the lump sum?

DEFRA are proposing to calculate the average payments made to that retiring farmer in 2018, 2019 and 2020. Then they will multiply this by 2.35. So on non-SDA land, that might be around £535 per hectare. However, DEFRA are looking at the total payment made to that farmer, not a per hectare or per entitlement rate. DEFRA say that this has been set at a level, to reflect what a farmer would otherwise claim for the years 2022-2027. However, this might change depending on the outcome of the consultation. 

What's the catch?

There are lots of unexpected conditions to be careful about.  For example, the consultation suggests that a farmer must properly retire and either sell their land or surrender all tenancies. It's an all-or-nothing approach so a farmer will be unable to part retire on some land, whilst keeping the annual BPS payments on other land. However, if the retiring farmer is in partnership, or has a limited company with other people (e.g their children) then the consultation suggests that all the directors and partners will also be prevented from claiming subsidy support in the future. This seems quite unfair and will negatively impact a lot of farming families where there is a genuine intention for the farmer to retire and allow a child to succeed, where that child is already part of the farming business. 

The other catch, is that all entitlements leased-in by the farmer will also be surrendered to the scheme. We fear this might lead to landowners claiming compensation from retiring tenants over the loss of their leased BPS entitlements.