The Single Payment Scheme was introduced by the EU to replace a
wide range of farming subsidies under the Common Agricultural
Policy and break the link between subsidies and agricultural
production.
The Scheme came into force on 1 January 2005. Entitlement to
the annual Payments was to be established by individuals who
applied by May 2005, and once obtained such entitlement could be
bought and sold in the open market, thereby acquiring a value.
The significance of this from an agricultural relief point
of view is that:-
Although entitlement could only be held by, and sold to,
persons registered as “farmers”, this definition could
cover many who would not be “occupying for the purposes of
agriculture” for IHT. Therefore, mere entitlement to Single
Payments is no guarantee that s117 IHTA is satisfied in respect of
the residence of the holder
For the purposes of the Single Payment Scheme agricultural
activity is defined as meaning 'the production, rearing or growing
of agricultural products including harvesting, milking, breeding
animals and keeping animals for farming purposes or maintaining the
land in good agricultural and environmental condition.'
Therefore a claimant can qualify for the payments by keeping
his land in good agricultural and environmental condition (GAEC),
but the claimant does not have to be in active agricultural
production.
The requirements of GAEC cover a number of management
objectives for qualifying land, which must be met, including soil
management, maintenance of habitat and landscape features, and
protection of hedgerows and watercourses. The provisions for
eligible land which is not in agricultural production (GAEC 12)
lays down the minimum standard of farmland management consistent
with being paid the single payment. As a minimum the land should be
kept in such condition to allow an Inspector to identify it and
inspect it - to enable the Inspector to be able to measure, walk
and identify any features on the land that should be excluded.
As a minimum the farmer must cut, scrub and cut and graze
rank vegetation on whole area at least once in five years. Thick
scrub should be prevented as the land should be kept in condition
where it could be readily returned to agricultural production by
the next growing season at the latest.
Regarding the interaction of the Single Payment Scheme with
IHTA 1984, Section 117 does not require agricultural land to be in
production either continuously or at a specific time. However it is
considered there must be an intention or expectation that the land
will be back in production at some time in the future.
However a landowner who had ceased production and was merely
keeping his land in good agricultural and environmental condition
in order to claim the single payment may be unable to satisfy the
definition of a farmhouse for Inheritance Tax purposes as discussed
above. Caseworkers who encounter difficulty in such instances
should contact Technical Group in Nottingham for assistance.
Land used for grazing leisure horses does not satisfy the
'occupied for the purposes of agriculture' test and so cannot
qualify for APR.
Because entitlement to Single Payments is not an
“interest in land”, and thus does not meet the
definition of ’agricultural property’ in S115(2),
agricultural relief will not be due on its value in any event.
