Serving the Farming Industry across the Midlands for 35 Years
A government consultation on plans to offer farmers a one-off lump sum payment to leave the industry is due to take place this spring. Defra to consult on retirement scheme for farmers

A government consultation on plans to offer farmers a one-off lump sum payment to leave the industry is due to take place this spring.

The lump sum exit scheme to help farmers retire is expected to launch next year. Farmers will be offered the chance to take a single lump sum in place of any further basic payments – which are due to be phased out by 2028.

It is not yet known how the payment will be calculated or the tax implications. The government says farmers who receive a lump sum will have to exit the industry – but it hasn’t been decided how it will work for family partnerships or limited companies.

Defra says rules for the lump sum payments will be set following consultation with growers and livestock producers this spring. Subject to the consultation results, the retirement scheme will open for applications in 2022.

Tenant farmers

Some 75% of tenant farmers have expressed an interest in the scheme, according to a survey by the Tenant Farmers Association. Owner occupiers will also be able to take part. The scheme is being introduced as part of Defra’s post-Brexit agricultural transition plan.

TFA farm policy adviser Lynette Steel said: “The survey captured the opinions of 360 tenant farmers. Three-quarters of those responding said they were seriously interested – demonstrating a strong appetite among tenant farmers.”

Well over half the respondents (63%) occupied all or most of the land within their holding on an Agricultural Holdings Act Tenancy. One quarter occupied land on a Farm Business Tenancy. Some 8% of respondents occupied land under alternative agreements such as grazing licences.

New entrants

Alongside the proposed new entrants’ scheme, the survey findings show that a well-executed retirement scheme could encourage new entrants into the industry and provide more opportunities for farmers looking to more on to bigger and better units

“Not surprisingly, over three quarters of respondents said the value of the retirement package would be the biggest factor they would need to consider before taking part in the scheme. Other key factors were readiness to retire and whether succession rights would be affected.”

“On a practical level, negotiating exits from farm tenancies is often a lengthy and complicated process. Therefore, given the short time frame Defra has outlined for the delivery of the scheme, we really need to see full scheme details by this autumn at the latest.”