DEFRA announces capital grants offer now open but spending caps imposed

The Department for Environment, Food and Rural Affairs (Defra) has announced the capital grants offer is now open following the freeze of applications in November 2024. Spending caps of between £25,000 and £30,000 have now been imposed for different high priority projects.

The Department for Environment, Food and Rural Affairs (Defra) has published an update on the funding of capital grants given for sustainable food production and environmental outcomes and confirmed they now have sufficient funding for capital grants for 2025-2026.

The Capital Grants scheme helps farmers and businesses by providing funding to cover part or all the cost of activities such as tree planting, buying equipment to improve air and water quality, or habitat restoration. This makes it easier for farmers, foresters and land managers to increase biodiversity and improve the local environment.

Defra will process the backlog of 4,000 applications they hold. However, spending caps have been introduced to limit the funds available for water quality, air quality, natural flood management, and boundaries, trees and orchards. Defra have stated the new caps will not apply to existing applications.

What are the new limits? 

• £25,000 for water quality 

• £25,000 for air quality 

• £25,000 natural flood management 

• £35,000 for boundaries, trees and orchards 

The cap does not apply to capital plans.  

Applicants can apply for a grant in more than one category but only one application can be submitted per year per Single Business Identifier (SBI). Defra have confirmed that if applicants have already submitted an application via the Rural Payments Service then no further action is required and this will now be processed.

This announcement follows Defra temporarily closing part of the overall capital grant offer to most new applications in November 2024.

You will be able to apply throughout the year and DEFRA will continue to monitor the situation to make sure demand doesn’t exceed the available funding.