Accounting for subsidy changes – How farmers can manage SFI payment shortfalls

By Robert Blair, Partner and ARA specialist

For many farmers, the Sustainable Farming Incentive (SFI) is a key part of their financial planning, offering payments for adopting environmentally friendly practices.

However, recent reports suggest that some farmers are finding their options limited due to historic land designations. often without prior knowledge of these restrictions.

If a portion of your land is listed on the Selected Heritage Inventory for Natural England (Shine), you may find certain SFI options off the table.

This can create unexpected gaps in financial planning, particularly for those who have factored SFI payments into their budgets.

So, what should you do if you’ve been affected?

Review and reassess your funding strategy

If your preferred SFI option is unavailable, alternative funding routes may be worth exploring.

While lower-value payments are available for maintaining historic grassland (£55/ha) or providing winter bird food (£515/ha), these may not align with your business model.

In cases where your land is ineligible for any SFI payments, it may be time to consider private environmental schemes, diversification, or restructuring your farm’s financial strategy.

Cash flow and tax planning considerations

Unexpected changes in subsidies can put pressure on cash flow.

If you were relying on an SFI payment that won’t come through, an accountant can help adjust your financial plans accordingly. This might include:

• Adjusting tax planning to reflect lower income or exploring reliefs that could offset the impact.
• Restructuring cash flow forecasts to accommodate the loss of anticipated payments.
• Identifying alternative revenue streams to fill the financial gap, whether through diversification, grants, or business restructuring.

Check your land designations before applying

Many farmers are only discovering Shine-listed land after applying for SFI.

To avoid surprises, check your land’s designation before factoring SFI payments into your budget.

We can help you assess the financial impact and explore other options if funding falls short.

The NFU is lobbying Defra and Historic England to review the issue, arguing that more farmers are affected than initially estimated.

While changes may be on the horizon, those impacted today must take proactive steps to adapt.

If you need support adjusting your financial plans in light of SFI changes, our team is here to help. Get in touch to discuss how we can help protect your farm’s financial future.