DEFRA’s Lump Sum Exit Scheme ‘Not Enough to Make a Difference’ 

Mar 25, 2022

Much has been made in the media about DEFRA’s lump sum exit scheme which proposes to pay older farmers to retire.  

The scheme, which opens for applications in April, could pay farmers up to £100,000 to give up working to make way for younger entrants coming into the industry who struggle to buy land.  

Essentially, it offers farmers a single, lump sum in lieu of any future payments under the Basic Payment Scheme (BPS), currently being phased out in favour of a new scheme based on environmental stewardship.  

To be eligible, as well as surrendering all future BPS payments, farmers will have to dispose of almost all of their farmland by sale or gift.  

But Ian Parker, director of Whitley Stimpson, said more information needed to be released about the scheme before farmers could decide whether to sign up or not.  

He added that even if the confusion surrounding it was cleared up, it was unlikely to be enough to enable farmers to retire.  

Ian said:

“The average age of a farmer in this country is increasing and there is certainly an issue for younger people wanting to join the industry being able to buy land. The Lump Sum Exit Scheme is a laudable attempt at trying to solve that problem, but the issue is that it’s due to open for applications in just a few weeks’ time, and there is not enough information available for farmers to know if it’s worth applying or not. For example, it has only just been confirmed that this receipt would be taxed as capital rather than income, which is a big consideration for those who might be interested in standing aside to let the next generation come through, but other uncertainties still remain. If DEFRA is serious about wanting farmers to sign up, they need to be a lot more transparent.” 

Ian added that as a condition of the scheme was that farmers had to dispose of their land, he felt the sums being offered would not be enough of an incentive for many farmers to apply.  

“Although £100,000 sounds like a lot of money it is not a huge amount to fund retirement,” he said. “And as many farmers will likely be gifting their land to family, they could be left very short. We would certainly urge caution about applying for this scheme and would recommend speaking to an expert before making a decision.” 

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