CAP payments do not count as State Aid

It has been confirmed that the Common Agricultural Policy (CAP) payments to farmers do not count as State Aid, even though the 2020 payments will come from the UK rather than the EU.

As the Institute of Chartered Accountants in England and Wales (ICAEW) points out, from 6 April 2020 the standard payroll employment allowance (EA) of £4,000 is deemed to be top-slice ‘De minimis State Aid’.

There are limits on the amount of State Aid that can be received, and if those limits are breached, the EA is reduced or withdrawn in full. The limit for the agriculture sector is effectively €20,000. Because of this, some farmers have been told that the standard payroll EA of £4,000 is not available because they receive an EU subsidy, such as a Basic Payment (BP).

However, it has now been confirmed that Pillar 1 direct payments, such as BP or Greening, delivered under the CAP are not considered to be State Aid because EU law establishes the eligibility criteria.

Although the payments received in 2020 will come from the UK rather than the EU, the scheme criteria are exactly the same, so the previous exemptions will apply. In fact, under the rules, only State Aid provided by the UK from its own national funds would count, as well as other payments made as part of the Rural Development Programme (RDP) and not exempted by Article 42 of the Treaty on the Functioning of the European Union (TFEU).

Any farmers in doubt about what they can or cannot claim should contact us for clarification and further detail about what does and does not count as legitimate State Aid.

Posted in Andrew Heskin.