3 December 2018

What is the criteria for Woodland Creation Farmland Premium payments?

The Forestry Commission requires evidence of the farming income generated, so they can confirm the “farmer” status of the applicant and process payments

A number of farming and landowning clients have recently experienced delays with their Rural Priorities payment because they are also applying for Woodland Creation Farmland Premium payments.  Those affected have received letters from the Forestry Commission advising that as a result of a recent audit, the European Commission are requiring the Scottish Government to carry out an annual check to confirm that businesses are still eligible to receive these payments.  This will involve checking that businesses still meet the “farmer” definition.

The process has now been agreed for doing this, and the Forestry Commission will require evidence of the farming income generated, so that they can confirm the “farmer” status of the applicants and process the payments.  This process will involve your accountant!

Under the 2007-2013 EU legislation and the Scotland Rural Development Plan, a farmer is defined as

“….a person who devotes an essential part of their working time to agricultural activities and who derives at least 25% of their gross income from farming, taking account of all the land they farm in Scotland”. 

In order for your status to be confirmed, and your payment to be released, your accountant will need to confirm the following either in relation to the individual if a sole trader, or the business if this is run through for example a partnership or a limited company:

  • That they represent you or your business
  • That they are aware of your/the business’s gross income and your/its farming interests
  • That you/the business devote an essential part of your/its working time to agricultural activities
  • Conclude with a statement that you/the business in respect of all the land with is farmed in Scotland derive at least 25% of your gross income from farming.

It is important to note that this check and declaration will now be required annually, so it is important to keep on top of the criteria to ensure that you are defined as a “farmer” for these payments.

Each year we will need to assess the gross income generated by you or your business and determine which elements are classed as from farming land in Scotland and which income is from non-farming sources.  The following examples show how income will be classed for these purposes:

Income from Farming

  • Annual farming subsidies and Scheme payments, including farmland premium payments, BPS, LFASS etc
  • Direct farming gross income, such as sales of farm crops or livestock produced by the applicant, including meadow or grazing land.  This will include gross income from horticulture, fruit cropping, market gardening and nursery grounds
  • Gross income from leasing or renting land, either on short or long-term leases.  This could be for grazing or other types of farming
  • Other income which is linked to your farming activity, for example driving as an agricultural contractor
  • Gross income that you make from contract farming land owned by someone else in Scotland
  • Gross income from agricultural contracting, in Scotland, such as hedge laying, hedge cutting, hay/silage making, combine harvesting, sheep shearing etc

Non-farming income

  • Rent or letting of cottages
  • Shooting income from grouse, deer or rough shooting
  • Income from timber sales
  • Income from equestrian businesses or rental for grazing by horses
  • Income from access leases, e.g. paint balling, archery, quad biking or wayleaves

Given that many farmers and landowners have taken active steps to diversify their operations over the last few years, it is important to ensure that sufficient income is being generated from farming and agricultural activities to qualify for these payments.