Tenant Farmers: Could the Early Retirement Package work to your advantage?
Tenant farmers across the UK are backing Defra’s early retirement scheme. Here’s everything we know so far:
The early retirement scheme was proposed in 2020 as part of a massive government drive to protect the environment. Older farmers will be offered an attractive lump sum exit payment to help them retire with dignity, encouraging them to move on, and make way for a new, more eco-savvy generation of farmers.
The exit payment will replace the remaining annual Basic Payment Scheme (BPS) support – which is due to be phased out by 2028.
It seems that the plan has initially met with approval with three-quarters of UK tenant farmers saying they would consider retiring – depending on the value of a government package offering them the opportunity to leave the industry.
The findings are based on a survey of 360 growers and livestock producers by the Tenant Farmers’ Association (TFA) and are significant as tenant farmers are often understandably reluctant to talk openly about their retirement plans in case it affects their relationship with their landlord.
How much is the package worth?
Precise details of how the payment will be calculated and the tax implications are not yet known, although the BBC has reported that the average farmer could receive a lump sum payment of £50,000 – capped at £100,000 for farmers with the most land.
For perspective, the average farmer currently receives about £21,000 in grants – although for those who own large amounts of land this figure can be considerably higher.
TFA’s Chief Executive George Dunn has responded by saying that:
“The payments on their own won’t be enough – but when you tie in other factors such as selling livestock, some farmers will want to take it up.
“For people on larger holdings, it won’t be very attractive – but a lot of owner-occupiers might find it attractive.”
So the figures are ambiguous (for now) but the impending decision is very real. Now would be the ideal time to get sound, impartial financial advice.
Planning is key for a graceful exit
With consultation in progress and a deadline for the early retirement scheme to be in place by 2022, the key to achieving the best outcome will be to allow enough time to plan. You may have land that needs to be surrendered, let, sold or transferred. This will take time and will need to be dovetailed with the timetable for the exit scheme. Planning is essential.
Here to support your long-term goals
There’s a lot to think about, and we fully appreciate the sensitivities around leaving farmland that may have been in your family for generations. Whether you’re planning permanent retirement or re-focusing your skills to a different industry we’re here to help you make the best decisions for you.
How can we help you today?
Get in touch for an informal chat.