Are you tempted by the Lump Sum Exit Scheme? 

Graduate Surveyor Morgan Clement has analysed details of the Government’s Lump Sum Exit Scheme released this week.

Are you tempted by the Lump Sum Exit Scheme? 

Designed to provide farmers who wish to retire from or leave farming, those eligible could receive a lump sum of up to £99,875, whilst at the same time free up land for new entrants and existing farmers who wish to expand their farming enterprise(s).

Time Scale. The window for applications to the Lump Sum Exit Scheme will be open from April 2022 until September 2022,

Eligibility.  In order to be eligible, applicants will either have

  • claimed BPS payments in the 2018 scheme year (or earlier),
  • inherited agricultural land in England, or
  • succeeded to an Agricultural Holdings Act 1986 tenancy after 15 May 2018 and made a 2021 BPS claim.

Payments. Payments under the scheme are due to be paid by 31st May 2024, by which time applicants will need to have

  • transferred their agricultural land in England (apart from up to 5 hectares which can be retained) or planted it with trees under a woodland creation scheme
  • transferred grazing and pannage rights on common land in England if applicable
  • surrendered English BPS entitlements

Applicants can apply for an extension to this final payment date if they have an Agricultural Holdings Act 1986 tenancy with succession rights and the succession goes to a tribunal, arbitrator or court, or in cases of probate.

Calculations.  The amount payable under the scheme is based on a reference amount which is calculated on the average BPS payments from 2018-2021 to include any reductions. The Lump sum payment is calculated by taking the “reference amount” (capped at £42,000) and multiplying this by 2.35; the maximum lump sum payment is therefore £99,875.  The Reference amount is the mean average of BPS payments (including any young farmer payment or greening payment) made to the business for the BPS 2019, BPS 2020 and BPS 2021 scheme years. i.e. (2019 + 2020 + 2021) / 3.

Partnerships & Ltd Companies. If some members want to leave or retire from farming, such as parents leaving the business to their children, the partnership or limited company can apply for a lump sum payment if a partner with 50% or more interest in the profits of the partnership, or more than one partner with combined interest of 50% or more, leaves the partnership.

Tax. The government intends to introduce legislation to provide clarity that the Lump Sum Exit Scheme payments will be treated as capital in nature and will be subject to capital gains tax, or corporation tax in the case of incorporated entities. The existing capital gains reliefs will be available where the qualifying criteria are met.

If you would like more information on the scheme, including eligibility, how the lump sum payments are calculated, and the application process, please do not hesitate to contact either Morgan on 01202 882103 or a member or Symonds & Sampson’s Rural Grants team in your nearest office. 

Trust us

Trust Symonds & Sampson

Follow us