Category: Policy & Business

The Farming Equipment and Technology Fund (FETF) is now open for applications for the Animal Health and Welfare grants.  Our article last month (see https://abcbooks.co.uk/grants-for-equipment-technology/) gave details of the grant.  In summary, this provides funding towards items of equipment and technology that have been pre-identified by Defra to help improve animal health and welfare on farms.  There are over 130 items on the list and 29 are new additions.  The minimum grant is £1,000 and the maximum is £25,000 and, under the Animal Health and Welfare grant, applicants can receive 50% towards the lower of either the cost set out on the list or the actual cost paid for the item.

Applications are scored (each item has a score), so it is possible not everyone will receive a grant, but applicants can increase their score by 20% if they provide evidence that they have discussed the application with a vet.

The application window runs until 1st May 2024.  The full guidance can be found at https://www.gov.uk/government/publications/farming-equipment-and-technology-fund-2024.  Applications are made using the new Farming Investment Fund (FIF) application service – this is separate to the Rural Payments service and requires a complete new registration.  A reminder that the application window for the Productivity and Slurry Management grants via the FETF opened earlier in the month (see https://abcbooks.co.uk/productivity-and-slurry-grants-open/) and runs until midday on 17th April 2024.

The Land Reform (Scotland) Bill was laid before Parliament on 14th March 2024.  The proposals include measures which will apply to large rural landholdings of over 1,000 hectares, prohibiting sales in certain circumstances until Ministers have considered the impact this will have on the local community.  This could result in large holdings being split into smaller lots to help local communities be able to buy them.  In addition, the Bill will introduce advance notices for the sale of some large landholdings; again this would be to give local communities more opportunity to raise funds so thay can own their own land.  The Bill will also place legal responsibilities on these largest landowners to show how they use their land and ‘how that use contributes to key public policies’ – i.e. climate change and protecting and restoring habitats.  They will also have to engage with local communities about how they use the land.

In other proposals, Scottish Ministers would have a duty to publish a model Land Management Tenancy – Environmental Tenancy to cover;

• regenerative and sustainable agriculture
• uses contributing to achieving net zero
• climate change
• sustaining or increasing biodiversity.

There are also proposals to revise Tenancy legislation in the following areas;

• compensation for improvments, including improvments which enhance sustainable or regenerative agricultural production
• extending Tenant’s diversification to cover environmental benefits
• compensation for game damage
• rent reviews – including the productive capacity of the holding, rent payable on similar holdings, economic conditions of relevant agricultural sectors, open market rent for Landlord’s fixed equipment not used for agriculture, and open market rent for land not used for agriculture
• the rules for good estate management and rules of good husbandry to include references to sustainable and regenerative practices

The full Bill can be found at https://www.gov.scot/news/land-reform-bill/.

A reminder that, although we don’t have a BPS claim to complete this year, Countryside Stewardship and Environmental Stewardship Revenue claims still have to be made.  Defra has confirmed the window is now open and will close on the usual 15th May.  Late claims, up until 2nd September, are possible but penalties will be applied to these.

The claims process will be the same as last year.  This can be done online via claimants’ Rural Payments accounts and there is the option (introduced last year) to use the more straightforward annual declaration if no changes have been made.

The latest agricultural rents data from Defra shows a mixed picture.  The All Farms rent for Full Agricultural Tenancy (FAT) (i.e. Agricultural Holdings Act (AHA) agreements) in 2022/23 has decreased by 7% from the previous year to £165 per hectare; the lowest it has been in the last 10 years.  This is driven by the decline in rents for Cattle and Sheep farms, in particluar, those in LFAs, which saw the largest fall, decreasing by 27% to £52 per hectare.

The All farms rent for Farm Business Tenancy (FBT) agreements have risen marginally in 2022/23 to £228 per hectare (a 1% increase).  Other than Cereals and General Cropping farms, all farm types saw an increase in average annual rent per hectare.  In stark contrast to AHA rents, LFA Cattle and Sheep Farm FBT rents have seen a significant uplift from £87 per hectare to £108 per hectare (24%).

Some sectors have experienced a rise in AHA rents whilst at the same time seeing a fall in FBT rents; for other sectors it is vice versa.  The table below shows a summary of the last three years.

Defra’s Farm Rents publication uses data from the Farm Business Survey.  Due to the time taken to collect the data, it is somewhat historic.  The figures just published are for the 2022/23 year – March to February (shown as ‘2022’ in the table below).  The full statistical notice can be found at https://www.gov.uk/government/statistics/farm-rents/farm-rents-in-england-202223.

Cereals farms on AHA Tenancies after quite a large decline in 2021 have seen an increase, although not back up to 2020 levels.  In contrast Cereal FBT rents continue to fall.  It’s a similar picture for General Cropping Farms, with an increase for AHA rents, but a continual decline for FBT rents.  Rents for Dairy land remain strong, particularly FBT rents.  LFA Grazing rents show a very confusing picture, with a strong uplift in FBT rents but a significant fall in AHA rents.  Lowland Grazing Livestock rents also show a fairly large decline for those on AHAs, whereas FBT rents remain fairly steady over the year.

As written previously, data on rents can fluctuate annually and one year’s information should not really be taken in isolation.  In general, rents have been on an upward trend, but looking to the future it would be expected that, as the BPS is phased-out, then overall rents will fall.  

Agricultural Property Relief

It has been confirmed that the existing scope of Agricultural Property Relief (APR) will be extended to include land managed under agri-environmental agreements.   Qualifying land must be managed under an agreement with, or on behalf of, the UK Government, Devolved Administrations, Public Bodies, Local Authorities or approved Responsible Bodies.  The latter relates to the new Conservation Covenents.  The extension applies to all parts of the UK and is to be effective for transfers (lifetime or on death) from 6th April 2025.  This means farmers and landowners taking part in such schemes, which in England covers the Sustainable Farming Incentive, Countryside Stewardship (Environmental Stewardship) and Landscape Recovery, as well as the England Woodland Creation Offer and other similar schemes will be eligible for APR and exempt from Inheritance Tax.

For land to be eligible, it must have been agricultural land for at least two years immediately prior to the land use change.  HMRC will provide guidance on the necessary evidence in due course, but this is not expected to be too onerous as, in some cases, a considerable amount of time may have passed before it is required.  The relief will be available where there is an agreement in place for the environmental land management scheme on or after 6th March 2024.  This includes an agreement entered into before 6th March 2024 if it remains in place on or after 6th March 2024.  Furthermore, the relief will continue to be available where an agreement has finished.  On the conclusion of an agreement it may be possible to return the land to agricultural use, but if this is not the case, it will still be eligible if the land continues to be managed in a way that is ‘consistent with that agreement’.

In terms of buildings, including farmhouses, being used in connection with the environmental land, they will qualify for APR where ‘that building is occupied with, and that occupation is ancillary to, environmental land’.  As currently, they must be of a ‘character appropriate to the environmental land’ to qualify for the relief.

Business Property Relief (BPR)

There will be no change to BPR.  The Government has confirmed if the land is still used in the business and the overall business is not mainly making or holding investments, BPR could be available.  Furthermore, land that is used to generate Carbon Units via the Woodland Carbon Code or the Peatland Carbon Code should qualify for BPR.

The announcement follows a consultation by the Government announced in last year’s Budget.  It will remove a significant barrier to Tenant farmers entering schemes by removing the risk that Tenants’ participation will endanger Landlord’s eligibility for APR over that land.  We had been anticipating that APR would extend to cover at least land entered into the SFI in England as this scheme is one that farmers are told can be entered into ‘alongside’ commercial farming.  This announcement goes beyond that and removes the ‘APR barrier’ for land owners entering longer-term agri-environmental schemes.

The Chancellor, Jeremy Hunt, delivered what is likely to be the last Budget before a General Election on the 6th March.  With Government finances constrained, the scope for a pre-Election giveaway was limited.  He did find some room for tax cuts however.  The main points are set out below;

• The ‘headline’ measure was a cut in National Insurance (NI) for employees and the self-employed.  Class 1 NI will drop from 10% to 8% as from 6th April (it was at 12% until January this year).  The Self-employed Class 2 NI will be reduced, as will Class 4 – from 9% to 6%
• There was less good news for employers, with it bening confirmed that the National Living Wage would rise to £11.44 from the 1st April
• The other ‘crowd-pleasing’ measure was on Child Benefit.  For higher-earners this will now start to be withdrawn at £60,000 rather than the previous £50,000
• The Furnished Holiday Lets (FHL) tax regime will be abolished from April 2025 so that short-term lets are treated the same as lomg-term let properties
• The threshold for VAT registration will rise to £90,000 (from £85,000).  The threshold for de-registration will also rise, to £88,000.
• Alcohol duty remains unchanged, as does fuel duty (including the ‘temporary’ 5ppl cut).  There will be a new duty on vapes
• Income tax rates and thresholds remain unchanged.  This means that ever-more taxpayers are drawn into higher-rate bands through ‘fiscal drag’.  Indeed, despite the tax cuts outlined the Budget, the overall tax burden in the UK is set to reach the highest it has been for 70 years, according to the Institute of Fiscal Studies
• Land entered into environmental managment schemes will continue to recieve Agricultural Property Relief (APR) for Inheritance Tax – see following article.

The Farming Equipment and Technology Fund (FETF) is now open for applications for Productivity and Slurry Management grants.  Our article last month (see https://abcbooks.co.uk/grants-for-equipment-technology/) gave details of the grant which, in summary, provides funding towards items that have been pre-identified by Defra to help improve the sustainability and productivity of farm businesses.

The application window for the Productivity and Slurry Management themes runs until midday on 17th April.  Applications for the Animal Health & Welfare grants are not yet open, but should be available later this month.  There has been a slight update to the guidance released last month, the latest can be found at https://defrafarming.blog.gov.uk/2024/03/06/farming-equipment-and-technology-fund-improving-productivity-and-slurry-management-grants-available/.  Applications are made using the new Farming Investment Fund (FIF) application service – this is separate to the Rural Payments service and requires a complete new registration.

The protection of hedgerows in future will be similar to the rules previously in place under Cross-compliance.  Readers will recall that, with Delinking of the Basic Payment in England, the Cross-compliance regulatory framework ended in England on 31st December 2023.  In most cases, these rules are already in domestic legislation and will continue to provide protection to the environment and animals.  But for hedgerows there is no direct domestic equivalent of the hedgerow management measures which were provided for under Cross-compliance and, in particular, GAEC 7a.  Defra therefore consulted on these measures back in June last year (see Bulletin https://abcbooks.co.uk/hedgerow-protection/).

Following the consultation, Defra has confirmed the proposed Regulations will replicate the approach already familiar to most farmers from the previous Cross-compliance rules including;

• a 2m buffer strip measured from the centre of the hedge where no cultivations can take place or applications of fertilisers or pesticides (apart from spot applications to control the spread of invasive or injurious weeds)
• exemptions to the 2m buffer strips will remain for hedgerows under 5 years old and for fields less that 2 Ha
• ban on cutting hedgerows between 1st March and 31st August to protect nesting birds
• exemptions will remain to the cutting ban in certain circumstances – i.e. for hedges next to footpaths or highways if they are obstructing the view or preventing passage, or where it could result in a human or animal health and safety
• an exemption will remain to allow cutting in August where OSR or temporary grass is to be established in that month, provided the RPA has been notified.

Whilst the rules are familiar, Defra is keen to emphasise the approach to enforcement of the new regulation will be different.  In keeping with the message being applied to regulation of other areas such as ELM, it will focus on being ‘fair and proportionate’.  The RPA believe an ‘advice-led’ approach will result in the best outcomes.  There will be another round of consultation on the proposed enforcement regime.  In the meantime Defra has said the new Hedgrow Protection Regulations will be made ‘as soon as Parliamentary time allows’.

Woodlands

It has been announced that there will be a new approach to the Woodland Creation Grant in Wales.  In 2024, there will be one window but this will be open from 4th March 2024 until 22nd November 2024, or until the budget has been allocated.  However, the Small Grant – Woodland Creation scheme (for tree planting to create shelterwoods, alongside watercourses, and in field corners or small fields for stock shelter, biodiversity and wood fuel)  will continue to be open for several rounds throughout the year – see table below for dates.

Animal Health Pilot Scheme

A pilot project to assess how closer working between farmers and vets can improve animal health and welfare on farm and also improve productivity is underway in Wales.  Through the project, a small number of vets will deliver regular ‘preventative medicine’ vet visits to achieve improvements in the health and productivity of farmed livestock.  The project is being managed by Welsh Lamb and Beef Producers (WLBP) and lessons learned will inform proposals for the Animal Health Improvement Cycle (AHIC) which will form part of the Sustaining Farming Scheme (SFS) due to commence in 2025.

Application dates

The table below summarises the scheme opening dates in Wales for the coming year;