Q&A - As a farmer, if I do not claim my 2014 SFP entitlements will I lose them?

19/05/2014

Q: I am very confused about SFP entitlements following the CAP Reform. Although they were activated last year, some of my entitlements are not likely to be activated this year. Will they be confiscated and therefore excluded from valuation calculations for the 2015 entitlements? Also, if I were to sell my entitlements would it affect the value of my land?

A:  Normally entitlements not activated in 2013 and 2014 would be confiscated with effect from January 1st 2015. However, as all entitlements are being abolished at the end of 2014 this will have no practical effect so entitlements not activated in 2013 or 2014 would still be regarded as held by you on 15th May this year and, as such, will be included in the calculation of the initial unit value of your entitlements established in 2015. This is of course provided you meet all the eligibility criteria in 2015.

In respect of selling your entitlements, entitlements are not attached to specific parcels of land. They have a value of their own and can be bought and sold completely independently of your land. However, before deciding to sell your entitlements it would be wise to seek professional advice as there may be capital gains tax implications.

It is also worth noting that if you sell your entitlements without claiming this year you can still apply to establish entitlements in 2015, provided you claimed on them in 2013 and are able to meet the active farmer provisions. There is no requirement to hold entitlements or claim SPF in 2014. If you have no entitlements in 2014, the initial unit value of the entitlements you establish in 2015 will be zero and then they will progress in equal steps towards the end value in 2019, which has still to be decided. Your entitlements will not be valued at zero in 2015 as 2015 is the first year of the transition.

Richard Lloyd

Richard Lloyd

Partner

Our Senior Partner and Head of the Property team in Oswestry