Long awaited details have now been released by the Rural Payments Agency regarding the Retirement Payment:
Scheme should be open from the end of April until 30th September 2022
If apply for scheme can no longer claim any Basic Payments going forwards
To apply must have claimed Basic Payment in 2018 or any previous scheme year or have inherited land or succeeded to an AHA tenancy after 15th May 2018
Before you take lump sum you must transfer your land or plant it with trees under a woodland creation scheme, transfer grazing rights from common land and surrender your Basic Payment Entitlements back to the RPA.
You can keep up to 5ha of land and any non-agricultural land (eg. Woodland, buildings & yard areas)
If renting out land must be on a Farm Business Tenancy with minimum term of 5 years
If a sole trader cannot transfer land to a spouse or co-habiting partner
If in a partnership or limited company then you can apply for the lump sum payment as long as the partner/shareholder(or collection of) leaving has more that 50% share of the partnerships profits or shares – land held by that partner or shareholder must be transferred (can be transferred to remaining partners/shareholders). Entitlements held by the partnership/limited company must still be surrendered to the RPA and the business can no longer claim Basic Payments (although can claim other available schemes)
If you claim the lump sum payment this will not stop you from claiming the Basic Payment for any other business you are involved in.
You can still work for another farmer or contractor after taking your lump sum payment
If you claim the lump sum payment you may no longer meet the rules of other schemes you are entered into and therefore you may need to repay monies you have received under those grants (eg. Countryside Stewardship, Farming Investment Fund)
Environmental Schemes can be transferred with the land
If you claim the lump sum you will not be eligible to enter into the Sustainable Farming Incentive and some options under Countryside Stewardship or Landscape Recovery (unless you are in a partnership or limited company)
How the Lump Sum will be Calculated:
The payments received for the 2019, 2020 and 2021 Basic Payment Years will be averaged to produce a ‘reference amount’ (this can include amounts received for Greening & the Young Farmer Payment)
The reference amount will be capped at £42,500
The lump sum payment will be 2.35 times the reference amount
A forecast statement of what you will be paid as part of the scheme can be applied for from February 2022 from the RPA
The lump sum will be treated as capital and therefore Capital Gains or Corporation Tax will be payable on the amount
Capital Gains Tax reliefs will apply where criteria met
Payments will be made from November 2022 once scheme criteria have been met
Scheme criteria must be met by 31st May 2024
What happens about the Basic Payment Scheme application for 2022?
This can still be claimed to protect your position in case you are not eligible for the lump sum payment or cannot transfer your land in time
If you claim Basic Payment for 2022 or 2023 and then decide to take the retirement payment the value paid for these years will be deducted from the lump sum due
For more information on the retirement payment or help to proceed with an application please contact Gemma on 07533340847 or gemma@blackdownconsulting.co.uk