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Post-Brexit changes to farming subsidies

7th February, 2018

The government has recently set out plans for farming subsidies post-Brexit. Doug Perry, partner at Nottingham chartered accountants Clayton and Brewill, explains the plans and what they mean for the farming industry.

Doug Perry chartered accountant at Clayton & Brewill Nottingham talks farming subsidiesMichael Gove, Secretary of State for Environment, Food & Rural Affairs, recently set out the government’s plans for farming funding post-Brexit. He announced that the government would guarantee subsidies at the current EU level until the 2022 election. He also suggested that payments could continue to 2024, but that this would be down to consultation.

The current situation with farming subsidies

The current subsidies funding system for farming is £3bn a year dedicated to UK farmers and is based on the amount of land farmers own.

What will happen to farming subsidies post-Brexit?

The government has committed to continue to pay subsidies post-Brexit, until the 2022 election. However, after this, it is likely that the largest subsidies will start to reduce with a maximum cap or a sliding scale of reductions.

Mr Gove hinted that the government would look towards a new way of paying farmers that would “use public money for public goods”. It is expected that plans would see farmers rewarded for planting and boosting wildlife, boosting water quality and recreating wildflower meadows.

The impacts

Numerous farming bodies have expressed their concern that the plans for UK farming post-Brexit are still vague. There is also growing concern over future trade deals and the security of the UK farming industry.

Minette Batters, deputy president of the National Farmers Union, welcomed incentives to protect the environment but said her key concern was over future trade deals.

She said: “We’re very proud of our high standards of environmental protection, of welfare, in the UK and we want those to be respected in any trade negotiation and we do not want to see cheaper food produced to lower standards.”

The value of British farmland has also recently fallen due to waning confidence over the future of farming subsidies and Brexit negotiations. According to research by property consultancy Carter Jonas, rural land was worth around £8,972 per acre at the end of December, compared to £9,778 in December 2016.

Exactly what will happen to the UK farming industry post-Brexit is difficult to predict. The changes will certainly impact on the countryside and food production – although it’s too soon to say exactly how.

What is clear is that to remain stable and successful, farmers will need to ensure they are structuring themselves in the most efficient way and are utilising any funding and subsidies available as effectively as possible.

Clayton & Brewill provide a range of specialist accountancy and tax planning services for farms and rural business. If you would like to find out more please contact Doug Perry by email or on 0115 950 3044.

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