Farmers’ retirement Lump Sum Exit scheme opening soon!

Farmers’ retirement Lump Sum Exit scheme opening soon!

The UK Government’s long awaited Lump Sum Exit scheme is due to open soon, allowing farmers wishing to retire a route out of the sector. Following Britain’s exit from the EU Common Agricultural Policy, the basic payments system (BPS) will wind down by 2027 and those coming to the end of their farming careers will soon have an option to cash in a portion of their remaining BPS entitlements. Farmers Weekly reports up to a maximum of £100,000 the total payout will be 2.35 times the average BPS figure received during the years 2019-2021 (a slight variation to  to the consultations carried out last year). This is a total payout of equivalent to £42500 of BPS received during that period.

The main driver of the scheme is to create more opportunities for new entrants or those farmers wishing to expand: Lump-sum claimants will have to transfer out their agricultural land in England. The scheme will be open for applications from April to the end of September, and once farmers have received the lump sum, they will not be able to claim any further BPS in England.

They will, however, be allowed to keep up to 5ha, plus any agricultural land they plant with trees under certain woodland creation schemes. They may also keep their farmhouse, commercial buildings and non-agricultural land.

The UK’s Farming and Environment Minister, George Eustace commented “Those of us who grew up with farming know the emotional connection farmers have with their land and the decision to retire or to exit the industry can be extremely difficult and is frequently postponed.

The purpose of the Lump Sum Exit Scheme is to assist farmers who want to exit the industry to do so in a planned way and provide them with the means to make a meaningful choice about their future.

It is understood that DEFRA plans to legislate to ensure the lump-sum payments are treated by HMRC as “capital” rather than “income”, which should ensure they have more favourable tax treatment.

It is also working with industry leaders, local councils and landowners to design a new entrants scheme. A series of pilot schemes will be launched later this year.

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