Defra plan to phase out direct payments in England over a seven-year agricultural transition period, running from 2021 to 2027. This approach has been designed to help claimants manage the phase out of direct payments as smoothly as possible, giving time for them to plan ahead.
The first reduction will be seen in the Basic Payment Scheme payment in December 2021, with reductions ranging from 5% to 25%. The larger payment reductions will be applied to the higher payment bands, working in a similar way to income tax bands, as shown in the table below:
| Scheme Year | ||||
| Payment Band | 2021 | 2022 | 2023 | 2024 |
| Up to £30,000 | 5% | 20% | 35% | 50% |
| £30,000 – £50,000 | 10% | 25% | 40% | 55% |
| £50,000 – £150,000 | 20% | 35% | 50% | 65% |
| More than £150,000 | 25% | 40% | 55% | 70% |
Defra have put together a handy tool called ‘The Progressive Reductions Calculator’, which uses the above percentage decreases to work out the reduced payment rates up until scheme year 2024. All that needs entering is the total annual payment figure usually received in December. There is no limit to the number of times you can use the calculator.
From 2024 the plan is to introduce Delinked Payments; DEFRA are currently consulting on the way in which delinking will work and are set to release further information once confirmed.
The last Basic Payment Scheme payments will be received for scheme year 2027.
The future for funding is through a system which pays farmers to improve the environment, improve animal health and welfare and reduce carbon emissions. Funds will be redirected back into new schemes that cover these objectives, such as ELMs.
Click here to calculate future payment reductions: Calculate my progressive reductions – GOV.UK (defra.gov.uk)
The leaflet shown here gives more information: Farming is Changing (publishing.service.gov.uk)
