Single farm payment

Tesla2

Hi ,
Any help here would be appreciated.

I look after a small farm for my dad who recently got sick. There is a single farm payment which is applied for every year. No animals on farm but we cut hay/silage and sell it on if we can. Recently a sheep farmer has approached me asking to rent the land long term but I would rather let it out to him yearly , my question is how would the single farm payment work as I don't want to loose it?

Thanks in advance

ganmo

Not too sure what the story will be about the sfp
But a long term lease would be better for farmer, the land and your dad in that the income from a long term lease is tax free where con acre would be taxed.
The farmer is more inclined to look after it better if he'll have it next year too.

Siamsa Sessions

The single farm payment is now called the 'Basic Payment Scheme' (just in case you hear people refer to it and wonder what they're on about)

Your dad, as a farmer, has a certain number of 'entitlements' associated with him (or his herd number has, to be precise). These would have been assigned to him based on what he farmed in specific reference years (and possibly a few other schemes).

To draw down the BPS, you have to activate the entitlements on actively farmed land (permanent pasture for hay/silage is actively farmed land). This is the annual application you mentioned.

If you lease the land to the sheep farmer, he includes it in his application for the BPS and you have no land on which to activate your entitlements (BPS). So, you would lose the BPS. What you could do in this situation though is lease or sell the entitlements.

Before you decide, it's worth going to a local auctioneer/agent who deals with leases and entitlements and asking their advice.

By the way, how's the fencing around the land? Coz that's one of the biggest issues with sheep.

Hope this helps.

Tesla2

Thanks for info on BSP, explained well. Fencing is poor for sheep, didn't think of that..

Thanks again Siamsa

Markcheese

The interested sheep farmer will have thought of fencing... so dont worry there.. as said above it sounds like a win win for you and your dad... but get a bit of advice... and ask around locally to see what he's like to deal with..
A long term lease could be 5 , 7 ,10 years, just make sure the terms suit ye and your ground ...,

Username John

Tesla2 wrote: »

Hi ,
Any help here would be appreciated.

I look after a small farm for my dad who recently got sick. There is a single farm payment which is applied for every year. No animals on farm but we cut hay/silage and sell it on if we can. Recently a sheep farmer has approached me asking to rent the land long term but I would rather let it out to him yearly , my question is how would the single farm payment work as I don't want to loose it?

Thanks in advance

Conacre - let for 11 months, keep drawing down the SFP. Pay tax on all income.

As said already - 5 year lease + are tax free.
For SFP - you can lease with the land, I think the gong rate is about 70%
So you would get 70% of entitlement value as part of lease, farmer renting keeps 30% (note, only the land lease is tax free, you'd still have to pay tax on the 70% SFP I believe)

The only thing to be aware of is, come 2019 or when the next review of the SFP / BPS, if you are not actively farming the land - you might lose the entitlements. Maybe... Your entitlements might be reduced anyways... No one knows...

You'd have to compare how much you'd end up in your pocket for each scenario, vs the risk...

The tax free aspect of the log term lease makes it very attractive, but depends on your own tax situation too...

Tesla2

I think I will play it safe with the SFP/BPS and keep drawing 100%, don't want to risk loosing it. I'm leaning towards rent for a single cut of silage this year, also try to get into GLAS this Autumn and see where I am next year.

Thanks John