Defra’s Lump Sum Exit Scheme opens for retiring farmers

The application window for Defra’s Lump Sum Exit Scheme has opened for farmers in England who wish to exit the industry.

The scheme will enable participants to receive some of their future Basic Payment Scheme (BPS) money up front, in return for surrendering their BPS entitlements, and either renting out or selling most of their land, or giving up their tenancies.

See also: Lump sum and delinking raise tax and timing questions

The application window opened on Tuesday 12 April and farmers have until 30 September 2022 to apply.

The exit payment will be based on the average direct payments made to the farmer for the 2019 to 2021 BPS years.

This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum, meaning that farmers could receive up to about £100,000.

Defra secretary George Eustice said: “The decision to retire or 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 that provides them with the means to make a meaningful choice about their future.

“The scheme will also free up land for new entrants to farming, and we will be saying more about our new entrants scheme shortly.”

TFA reaction

The Tenant Farmers Association (TFA) said it was good to see Defra finally issuing the scheme guidance.

TFA chief executive George Dunn said while the scheme may not have widespread appeal, it will help some within the farming community to exit and create opportunities for others to enter the industry, or expand their existing operations.

“We have spoken to a lot of tenant farmers who are interested in accessing the scheme.

“It will be particularly beneficial for farm tenants able to combine the lump-sum payment with surrender payments from their landlords or where they have identified potential successors to take over their businesses.”

See guidance on how to apply for the Lump Sum Exit Scheme on the government website.

The TFA and Country Land and Business Association have also issued guidance (PDF) to assist landlords and tenants to navigate their way through end of tenancy and succession negotiations in the context of the scheme and the deadlines it imposes.