The Basic Payment Scheme (BPS) is currently the main annual government rural grant for farmers to supplement their income, but the BPS is due to be phased out progressively by 2028.
At present, BPS payments are made from mid-December. Applicants must apply between March and May, have at least 5 hectares of agricultural land (approx. 12.36 acres), and 5 ‘entitlements’ to be eligible. But as we all settle into Brexit’s bumpy ride, farmers and landowners are going to be receiving less money as a grant each year until then, as shown below.
Table 1: Percentage reduction in scheme payments
(Source: DEFRA, 2020)
| Payment band | 2021 | 2022 | 2023 | 2024 |
| Up to £30,000 | 5% | 20% | 35% | 50% |
| £30,000–£50,000 | 10% | 25% | 40% | 55% |
| £50,000–£100,000 | 20% | 35% | 50% | 65% |
| More than £150,000 | 25% | 40% | 55% | 70% |
For example, a farmer with 125 hectares (ha) eligible for BPS was entitled to a payment of approximately £29,152 for 2020 claim year (1ha = £233 subsidies).
However, taking into account Table 1, in 2021 the same farmer would be entitled to 5% less (£27,694) as they’re in the first payment band; then 20% less in 2022 (£23,322) etc, until subsidies reach zero by 2028. For farmers with significantly more than 125ha, let’s say 1,000ha, the system gets slightly more complex.
1,000ha would have entitled the farmer to £233,216 of subsidies in 2020, but that figure is reduced to £188,912 in 2021, as demonstrated by Table 2.
Table 2: Example of subsidy reduction based on 1,000ha
(Source: AssetSphere, 2021)
| 2020 subsidies | Reduction | 2021 subsidies | Reduction | 2022 subsidies |
| £30,000 | 5% | £28,500 | 20% | £24,000 |
| £20,000 | 10% | £18,000 | 25% | £15,000 |
| £100,000 | 20% | £80,000 | 35% | £65,000 |
| £83,216 | 25% | £62,412 | 40% | £49,930 |
| Total £233,216 | Total £188,912 | Total £153,930 |
In addition to the changes mentioned above, DEFRA announced during the first week of December 2020 that farmers will now be offered the chance to take a lump sum payment in 2022 instead of receiving their annual BPS payments each year until 2028. This is an attempt to speed up the process of farmers retiring and/or looking for a way to exit agriculture to make way for new entrants to the sector.
DEFRA are in the process of consulting with the farming industry to finalise details on who will be eligible and how much they will receive with the aim of accepting applicants in early 2022. All that is known to date is that applicants must reside in England (other territories will be given more time to phase out) and exit the farming industry to be eligible.
DEFRA’s new post-Brexit scheme, the Environmental Land Management Scheme (ELMS), is due to rolled out by 2024, but this is not to be mistaken as a direct replacement for the BPS scheme and may not suit every farming business.
The agricultural industry is already under extreme pressure with the volatility of markets before adding the changes to support mechanisms into the mix.
Therefore, if they haven’t already, farmers should be scrutinising their business plans and should also consider their succession plans to accommodate the shift of support to the industry to ensure their businesses remain sustainable, which may involve diversification projects.