Are you ready for ELMS?

Spring is a time of anticipation and preparation for the year ahead, and at the time of writing, we await further guidance on environmental land management schemes (“ELMs”). Rural professionals are poised, pens ready, to address the transition from Basic Payment Schemes (“BPS”) and Countryside Stewardship schemes (“Stewardship”) to ELMS in our day-to-day dealings. If you are considering which scheme is best for you, speak to your advisors about the possible wider implications. For example:

Do I need my landlord’s permission to enter a new scheme?

We await further clarity on how tenants can participate. The Sustainable Farming Incentive (designed to be more accessible) will not require landlord’s consent as a condition of entry, but you should check the tenancy itself, which may say otherwise.

The Local Nature Recovery scheme is described as “the more ambitious” successor to Stewardship, so check if or how your tenancy agreement deals with Stewardship. Landlords may still be mindful of maintaining a certain level of ‘agricultural’ production, and a collaborative approach will likely be needed for the “more radical and large-scale approach” of the Landscape Recovery scheme.

What if I sell the land, or my tenancy ends, part way through a scheme?

Like Stewardship, the new schemes are intended to be long-term commitments, although the average length of three years is perhaps less onerous than the five years of Stewardship. We expect there to be penalties or repayment due on early termination.

If the schemes apply in the same way as Stewardship, a new buyer or incoming tenant will not automatically inherit responsibility for the scheme. Discuss this with the buyer, landlord or incoming tenant at an early stage, so legal documents can be drafted accordingly.

Where another party has access to your scheme land, or there are overlapping timeframes, seek suitable guarantees from the other party to maintain the land and uphold the required standards going forward.

What about tax?

Speak to your solicitor, accountant and land agent if you intend to put additional land into a scheme or other nature project. Taking land out of traditional agricultural production may tip the scales on how HMRC views a claim of agricultural property relief for inheritance tax purposes.

Whilst many in the industry are pushing for an update to the definition of “agriculture” for tax and tenancy purposes, specifically including land management schemes, this has not yet been addressed in legislation.

As always, it’s a balancing act, so make sure your professional team are in the loop and aim to reassess your estate planning regularly.