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B5.108 Compensation etc—introduction

Government interventionism in agriculture has taken a variety of forms –commodity price fixing, basic (formerly single) payment scheme, and grants and subsidies to name but three. The current programme is the ELMs (Environmental Land Management schemes).

With the move away from the area-based subsidy regime in the UK, such as the basic payment scheme (BPS), to ELMs, consideration has to be made towards the correct accounts, tax and bookkeeping of such receipts. The Spring Budget 2023 brought the announcement of a consultation on the tax treatment of ELMs for farming, including a call for evidence on how the production and sale of ecosystem service units should be taxed¹, aiming to understand the commercial understanding of these land uses and areas of uncertainty on income and corporation tax treatment. The outcome was that the Government are establishing a joint HM Treasury and HMRC working group with industry representatives to identify solutions that provide clarity on the taxation of ecosystem service markets where existing law or guidance may not provide sufficient clarity.

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