The Sustainable Farming Incentive (SFI) will reopen in 2026 with two distinct application windows, marking a further step in the evolution of England’s post-BPS agricultural support framework. With changes to eligibility, payment caps, and available actions, farmers and land managers are being encouraged to prepare early to maximise the opportunity presented by the new SFI26 offer. Defra and the Rural Payments Agency (RPA) have now published initial guidance confirming that SFI26 will open in June and September 2026, replacing the previous rolling application model with time-limited windows.
Two application windows in 2026
For the first time, the SFI will operate through two controlled application windows rather than continuous access.
Window 1 – opening June 2026
The first window is scheduled to open at the end of June 2026 and is expected to remain open for around two months, although it may close sooner if the allocated budget is fully committed. This initial window is restricted to two categories of applicants:
Small farms, defined as those with between 3 and 50 hectares of agricultural land; and farm businesses without an existing Environmental Land Management (ELM) revenue agreement, including SFI23, SFI24, Countryside Stewardship Mid or Higher Tier, or Higher-Level Stewardship. To qualify, the farm business must have had a Single Business Identifier (SBI) registered with the RPA, with eligible agricultural land linked to it, by 1 January 2026.
Window 2 – opening September 2026
A second application window will open in September 2026 and will be open to all eligible farmers and land managers, regardless of size or existing scheme participation. This provides an opportunity for those who do not meet the Window 1 criteria, or who choose not to apply earlier, to enter the scheme later in the year. As with Window 1, Defra has confirmed that the September window may close early depending on budget uptake.
Key structural changes in SFI26
SFI26 introduces several important structural changes. Each farm business will be limited to one SFI26 agreement, with payments capped at £100,000 per agreement year. This limit applies across both application windows but does not affect payments under existing SFI23 or SFI24 agreements. The scheme has also been simplified, with the number of available actions reduced from 102 to 71. Some commonly used actions, such as herbal leys and winter bird food, have seen payment rate reductions, while certain moorland actions have increased. Any reductions apply only to new SFI26 agreements.
In addition, rotational actions cannot be increased beyond the level committed in Year 1, making it particularly important to structure applications correctly from the outset.
Farmers, specially those eligible for the June window, should now ensure that Rural Payments maps, business contact details, and application permissions are up to date. Delays in addressing these points could result in missed opportunities if application windows close early due to high demand.
Strategic considerations
With payment caps and fewer actions available, SFI26 places a renewed emphasis on strategic planning. Farmers may need to assess which actions align best with their existing rotations, tenancy terms, and longer-term environmental objectives. For some, particularly those close to the £100,000 cap across multiple schemes, the interaction between SFI26 and existing agreements will require careful modelling. While the second application window in September offers wider access, businesses eligible for Window 1 may wish to consider applying early to reduce the risk of missing out due to budget constraints.
Looking ahead
The reopening of the SFI in June and September 2026 signals Defra’s intention to provide greater stability and predictability after a period of uncertainty in scheme access. Although the offer is more constrained than in earlier rounds, it remains a central component of farm support in England and will continue to play a significant role in underpinning farm incomes alongside productivity and capital grant schemes. Full scheme rules, action details, and final guidance are due to be published on GOV.UK ahead of the June opening, and farmers are advised to monitor updates closely.
Other grants and funding opportunities
In addition to SFI, farmers and land managers should be aware that a wide range of other grant schemes may be available, either alongside or separately from SFI agreements. These include woodland and forestry grants (for example, grants supporting woodland creation, management, and maintenance) as well as capital and environmental grants offered through local bodies, such as water authorities. Water company schemes commonly support capital projects that deliver water quality or flood-risk benefits, including items such as new or upgraded farm tracks, improved yard infrastructure, fencing to protect watercourses, and drainage or runoff control works.
As eligibility, funding conditions, and interaction with existing environmental schemes can vary, it is important to consider how these additional grants fit alongside SFI and other ELM agreements. Farmers are encouraged to review opportunities early and discuss proposed claims with their professional adviser to ensure funding is structured appropriately and that there is no risk of double-funding or unintended tax or accounting consequences.
Tax treatment of SFI grant income
Farmers should also be aware that the tax treatment of SFI payments is not uniform and will depend on the nature of the environmental activity being funded. In broad terms, some SFI payments may be treated as revenue income, taxable as part of the farm’s trading profits, while others may be regarded as capital in nature where the grant is linked to capital works, long-term land improvement, or the creation of enduring assets. The distinction can materially affect both income tax and capital allowances positions, as well as the timing of when income is recognised.
Given this variation, it is important that full details of the SFI actions and payments claimed are provided to your tax or accounting adviser once an agreement is in place, so the correct taxable treatment can be reviewed and applied. Early advice can help ensure that SFI income is reported appropriately and that any available reliefs or elections are considered.
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