SVM115125 - Liaison with the Valuation Office Agency and other offices: Delinked payments, formerly Single Payment Scheme (SPS) and Basic Payment Scheme (BPS)

The Rural Payments Agency (RPA) replaced the Basic Payment Scheme (BPS) in England with delinked payments from 1 January 2024. The 2023 scheme year was the last year of BPS. Further guidance on the current delinked payment rules can be found in the Business Income Manual at BIM55136, BIM55138 and BIM55140.

The Single Payment Scheme (SPS) was the principal subsidy scheme within the EU and was brought in to replace most existing farm subsidies from 1 January 2005 and was based on the amount of land held. To claim SPS you needed to be a farmer undertaking enough agricultural activity to meet the cross compliance rules, hold SPS entitlements and have eligible agricultural land.

In England a hybrid payment system was chosen, where the historic element of the payment dominated at first, but this was reduced and replaced by a flat rate area payment over an eight-year period. By 2012 the English payment was on a 100% area basis.

The devolved administrations in Scotland, Wales and Northern Ireland chose a different payment basis, being based upon the farmer’s historic subsidy claims in the period 2000-2002.

Initially, farmers were allocated one unit of entitlement per hectare of land occupied.

Under the SPS, England was divided into three regions:

  • Non-Severely Disadvantaged Area (SDA) - England outside the upland SDA
  • SDA - English upland SDA other than moorland
  • SDA Moorland - English moorland within the upland SDA

Land in a specific region could only be used to support entitlements and thus payment claims in that same region. Similarly only entitlements from the devolved countries could be used to make claims within those countries.

From January 2009 the former set-aside entitlements and special entitlements became normal entitlements.

In 2015 BPS replaced the Single Payment Scheme.

Transfer of Entitlements

The Single Farm Payment entitlement was freely transferable, with and without land, in other words it could be sold. By contrast, leasing needed to be accompanied by an equivalent land transfer.

Entitlements could only be transferred to farmers (not pension funds and so on), and only within the same EU member state.

Entitlement values in England initially varied widely as the historic element was based on farmer’s past subsidy claims. Sale prices were generally compared on the basis of a multiplier of the yearly income generated by the entitlement.

Analysis of land transactions showed that the absence of SPS payment entitlements from sales of farmland in England did not appear to generally make much difference to values. Up to 2010 the ready supply of separately available entitlements at low cost meant purchasers could easily acquire the right to claim if the subsidy was absent.

BPS payments were based on area and were based on allocation of entitlements in 2005.  They were non SDA, SDA and Moorland. Applications were once a year.  Farmers required at least 5 hectares of agricultural land and 5 entitlements to apply.

There was no clear pattern evident in the land market regarding the treatment of entitlements when land and farms were sold. Entitlements were often included within the sale price, but where a previous tenant had registered them then the land may have been sold without entitlements. There was some evidence during the initial years of the scheme that higher value entitlements were offered separately at an additional fixed price to the land. As the historic element in England diminished in value this approach declined, and most entitlements were included within the land price, reflecting the fact their value was small in comparison to that of the land.

All Farming companies would be expected to have an entitlement to SPS and if farming a large area this aspect can have a significant value.

Should you wish to have an informal opinion of value or have a general query on SPS, BPS or delinked payments, you can contact the SAV Bloodstock Team.

If the matter is considered worthwhile, questions of value or the operation of delinked payments should, if necessary, be referred to the Valuation Office Agency via the Initial Appraisal Unit (IAU) in Nottingham for advice.

Additional Guidance: SVM150000