Welsh Ministers have signed regulations to wind down the Basic Payment Scheme in Wales. The law takes effect on 1 January 2026, gives Ministers the power to reduce BPS each year, and confirms closure at the end of 31 December 2028, with revocations kicking in on 1 January 2029. The instrument was made on 3 December 2025 and approved by the Senedd.

The Welsh Government’s Sustainable Farming Scheme (SFS) description sets out the planned taper. Against 2025 values, BPS support falls to 60% in 2026, 40% in 2027 and 20% in 2028, with the final BPS claim in 2028 and no BPS applications or payments in 2029. On that path, a farm receiving £40,000 in 2025 would see £24,000 in 2026, £16,000 in 2027 and £8,000 in 2028.

There is a new operational wrinkle for cashflow planning: the regulation changes the Welsh ceiling provisions from “must” to “may” and allows decisions “at any time before payments are made,” not strictly before the start of the scheme year. In practice, that means budgets can be finalised closer to the payment run than before. Factor this timing risk into overdraft limits and supplier terms.

For entitlement traders and agents, the rulebook tightens sharply. From 2026, transfers can only occur when each entitlement moves with an eligible hectare in the same transaction from the same transferor. In other words, naked entitlements trading effectively ends. Welsh Government guidance mirrors this by flagging that transfers will be restricted to movements with land. Expect lower liquidity and a thinner market into 2028.

Two further closures matter for new entrants and succession planning. The national and regional reserves are being shut for BPS purposes, removing a route to source entitlements. And the Young Farmer Payment is closed to first‑time claimants from 1 January 2026; existing recipients can continue under their five‑year window until they either join SFS or BPS ends. This narrows legacy options and pushes newcomers towards SFS from day one.

What does this mean for farm incomes? If you remain on BPS through the transition, your direct support is on a clear downward glide path. The tapered profile smooths the drop rather than cliff‑edging it, but the effect on working capital is still material. Lenders will want to see 2026–2028 budgets that swap in the 60/40/20 rates and show how any SFS Universal Payment and optional actions replace lost BPS cash.

Land deals and tenancies will re‑price risk. With transfers tied to eligible hectares, entitlements no longer operate as a portable income line; any premium they command will decay as we approach 2028. For short‑term lettings, expect tighter clauses around who carries BPS taper risk and how any SFS income is shared once a business switches, especially where contract farming agreements have historically banked on BPS to cover fixed costs.

Switching into SFS has a one‑way effect on legacy rights. Once a business opts into SFS, it cannot revert to BPS and will surrender its BPS entitlements. That makes the sequencing decision a genuine fork in the road: stay on a shrinking BPS to 2028, or move earlier to SFS and build Universal, Optional and Collaborative payments into the profit and loss. The RPW Single Application Form window for SFS runs March to 15 May each year.

There are also procedural tidies to note. The law removes various BPS allocation and reserve mechanisms and amends the implementing regulation so that any undue entitlements are adjusted rather than parked in a reserve. The savings clause keeps previous provisions alive only as needed to finalise outstanding rights for claim years up to 31 December 2028, which should help RPW close the books cleanly.

For practical planning, start from your verified 2025 BPS figure and model the 60/40/20 taper. Layer in your SFS Universal Payment assumptions and any Optional or Collaborative actions you can credibly deliver in 2026. If you are mid‑succession, align land transfers with the new rule that entitlements must travel with eligible hectares, and revisit tenancy heads of terms accordingly. The policy direction is now set; the winners will be the businesses that treat 2026–2028 as an orderly shift to the SFS era.