DEFRA released a wealth of information yesterday including opening the Countryside Stewardship window for 2022, but amongst the documentation was further information about the Lump Sum Exit Scheme:-
Lump Sum Exit Scheme
The Lump Sum Exit Scheme is targeted at existing BPS claimants who with the payment provided will surrender all their existing BPS entitlements. Broadly the scheme will allow applicants to take a payment of roughly the equivalent to their expectations of the BPS scheme as it is phased out in England, in exchange for withdrawing from farming and making land available to others or planting it with trees.
The payment will be calculated by averaging the BPS payment received by business in 2019, 2020 and 2021, and the average will be capped at £42,500 then that figure will be multiplied by 2.35 to approximate the present value of the potential BPS entitlements remaining. This equates to a maximum figure of £99,875. To be eligible the applicant has to undertake the following:
- Dispose of the land
- By sale, gift of minimum 5 year lease
- Surrender or any tenancies
- Pass any 1986 Act tenancies on by succession
- By planting the land under a woodland creation scheme
- Must have made a BPS claim in 2018 or earlier (or if inherited an AHA tenancy after 15th May 2018 that will also be included).
The applicant is able to retain their farmhouse, buildings and up to 5 hectares (circa 12.5 acres) of eligible land. This scheme is not competitive, and all eligible applicants should be accepted. As it is calculated on the remaining BPS available, applications are likely only to be available this year. Once in place the applicant’s entitlements are surrendered and cancelled, no new entitlements will be created either generally or via the new entrant route. A new occupier of any land may bring entitlements from elsewhere, as there will be no entitlements available with that land once this scheme has been opted for.
There is extensive further information covering a wide variety of business arrangements, when additional entitlements were taken on and inheritance or death of the applicant.
This scheme has been delayed, and it is recommended even if you pursue an application under this scheme, you still apply for BPS this year as normal to cover yourself in the instance your application is not successful.
It has been agreed that the Lump Sum will be assesses under Capital Gains Tax, this means the usual reliefs for CGT, from the annual exempt amount under Business Assets Disposal Relief will be available for the Lump Sum and any other disposals that may be taxable.
The scheme will be open for applications from April onwards.
This is the link to the latest news article released by DEFRA for the above: https://www.gov.uk/government/news/government-commits-to-support-farmers-who-wish-to-leave-the-industry
Should you have any further queries about this scheme and whether it might be suitable for you, please do not hesitate to contact Ellie Watkins on 07495 006808 or firstname.lastname@example.org