Some further details on the Lump Sum Exit Scheme for retiring farmers have been release by the government this week. The guidance details eligibility, calculation of the payment, and a timescale for the introduction of the Scheme.
To be eligible you must apply between April and September 2022, though details of how to apply are still to be finalised. You must be a Basic Payment Scheme applicant in England and have made a claim in 2018, or inherited land or succeeded to a tenancy since then. Most of your land (save for no more than 5 hectares) must be transferred, let out under a farm business tenancy of no less than 5 years, or given over to woodland, and you must surrender your BPS entitlements.
The land cannot be transferred to your spouse or civil partner, but could go to a son or daughter.
If your farm partnership or limited company claims the BPS entitlements, then a Lump Sum can still be claimed but partners or shareholders with at least a 50% share in the business must retire. However, all of the entitlements claimed by the farm partnership or limited company must be surrendered.
As well as surrendering entitlements, you may not be eligible for some of the other replacement Schemes after you have claimed a Lump Sum Exit payment, the idea being that you have left farming at this point.
The payment will be calculated by multiplying your average BPS payment (capped at £42,500) by 2.35. This means the maximum payment that could be claimed is £99,875. The payment will be subject to capital gains tax or corporation tax.
Further details will be released later this year.
Will the scheme be popular? Traditionally, farmers have never retired due to the tax position with inheritance tax reliefs but perhaps this will be sufficient incentive for change.
It could help those farmers who wish to retire or leave farming to do so in a planned way.
https://www.gov.uk/government/publications/lump-sum-payments-for-farmers-who-leave-or-retire-from-farming-and-delinked-payments/lump-sum-exit-scheme-and-delinked-payments-how-the-payments-will-work
