Chris Muir, Environmental Adviser at StephensonsRural, outlines who can apply for SFI26, the key changes farmers need to be aware of and why early preparation will be essential for the first funding window.

The first application window for the Sustainable Farming Incentive 2026 (SFI26) has opened, giving eligible small farms and businesses without an existing Environmental Land Management agreement an opportunity to apply.

A total of £60 million has been allocated to Window 1, which is expected to remain open for around two months. However, the window may close sooner if the available funding is fully allocated, making early preparation and submission advisable.

The Department for Environment, Food & Rural Affairs (Defra) plans to publish updates when approximately 25, 50 and 75 per cent of the Window 1 budget has been committed.

Who can apply during Window 1?

Window 1 is available to farm businesses that qualify as either:

• a small farm, defined as having no more than 50 hectares of agricultural land linked to its Single Business Identifier (SBI) on 1 January 2026; or

• a farm without a live, Rural Payments Agency-administered Environmental Land Management revenue agreement on 1 January 2026.

Applicants only need to fall into one of these groups.

The business must also have been registered with the Rural Payments Agency and held an SBI by 1 January 2026. At least three hectares of agricultural land must be linked to that SBI when the application is started.

Farmers who are eligible for Window 1 but do not apply during this period will have another opportunity when Window 2 opens in September 2026. Window 2 will be available more widely to farmers and land managers who meet the general scheme requirements.

Fewer actions and new payment limits

SFI26 contains 71 actions, compared with 102 under the previous SFI offer, so applicants should review the available options carefully before deciding what to include.

Each farm business can hold only one SFI26 agreement across the two application windows. The total annual value of the agreement is also capped at £100,000 per SBI.

Most actions will run for three years and the previous SFI management payment has been removed.

Three paid planning actions available under the earlier scheme are no longer included:

• CSAM1 – assess soil, produce a soil management plan and test soil organic matter;

• CIPM1 – assess integrated pest management and produce a plan; and

• CNUM1 – assess nutrient management and produce a review report.

Although the nutrient management action is no longer funded, farms must still comply with the Farming Rules for Water. Applications of organic manure and manufactured fertiliser must be planned so that they do not exceed soil and crop requirements or create a significant risk of water pollution.

Farmers should therefore continue to maintain and use appropriate soil and nutrient records, even though producing these plans is no longer a paid SFI action.

Payment reductions for popular actions

Payment rates have been reduced for several widely used actions.

Under SFI26, the annual rates include:

• £532 per hectare for legume fallow, down from £593;

• £224 per hectare for herbal leys, down from £382; and

• £648 per hectare for winter bird food on arable and horticultural land, down from £853.

Applicants should consider the cost of establishing and maintaining each action before entering it into an agreement. Digital maps should also be checked to ensure that all relevant land parcels, areas and land covers are recorded correctly before an application is started.

Capital Grants to open in July

Farmers and land managers should also begin preparing for the 2026 Capital Grants offer, which is due to open for applications in July.

The programme has a total budget of £225 million and will support work including hedgerow and tree planting, boundary restoration, natural flood management and improvements to air and water quality.

Funding limits will include up to £25,000 for each of the air quality, natural flood management and water quality groups, and up to £35,000 for boundaries, trees and orchards. Applicants will be able to include eligible assessment and improvement items alongside these groups.

Demand for the previous Capital Grants round was high and strong competition is expected again. Defra has also warned that incomplete applications caused delays and rejections last year, so supporting evidence should be prepared and submitted with the application.

Farmers considering either SFI26 or Capital Grants should review how the available actions fit their land, existing agreements and wider business plans before applying.

Further details are available through the government’s SFI26 guidance and Capital Grant Finder.

Anyone who would like help reviewing the options, preparing an application or assessing how the schemes could work alongside their existing agreements should contact the StephensonsRural team as soon as possible.

If you would like to discuss the new funding further, please get in touch with Chris Muir or Lizzy Elgie in the StephensonsRural team.