DEFRA stacking guidance — what can be combined
Combining income from different environmental payment schemes on the same land is called "stacking". Here's what's confirmed, what's likely, and what's blocked.
What stacking means
“Stacking” is the practice of drawing income from more than one environmental payment scheme on the same parcel of land. For example: receiving LRS implementation payments and selling carbon credits and generating units — all from the same restored peatland.
has issued guidance on which combinations are permitted. The core principle is and non-: you cannot sell an environmental benefit that has already been funded by another scheme. But not all combinations are blocked — many are permitted.
The stacking matrix
The nine combinations that matter most for Ure Dales participants, colour-coded by status.
| Combination | Status | Notes |
|---|---|---|
| LRS payments + Peatland Code carbon credits | Likely permitted | DEFRA general stacking guidance supports this. Specific Ure Dales confirmation pending. |
| LRS payments + Woodland Carbon Code credits | Likely permitted | Same basis as above. Confirmation pending. |
| LRS payments + BNG units (same parcel) | Blocked | DEFRA December 2024 guidance. Hard prohibition on same-parcel combination. |
| LRS payments + Nutrient neutrality credits | Out of scope | The River Ure is not on Natural England's designated nutrient neutrality catchment list (GOV.UK, 11 March 2026). Statutory nutrient credits are therefore not available to Ure Dales land, regardless of LRS rules. See the nutrient neutrality page. |
| BNG units + Nutrient neutrality credits (no LRS) | Confirmed | DEFRA has confirmed BNG and nutrient credits can be stacked on the same land. |
| Carbon credits + BNG units (no LRS) | Generally permitted | Both are private voluntary markets; can coexist subject to additionality. |
| Carbon credits + Nutrient neutrality credits (no LRS) | Generally permitted | Same basis. |
| CS Higher Tier + LRS (same parcel) | Not permitted | Early exit from CS is available to enter LRS; cannot run both simultaneously. |
| SFI actions + LRS | Check per action | Some SFI actions compatible; others not. Depends on whether they overlap with LRS objectives on same land. |
LRS payments + Peatland Code carbon credits
Likely permittedDEFRA general stacking guidance supports this. Specific Ure Dales confirmation pending.
LRS payments + Woodland Carbon Code credits
Likely permittedSame basis as above. Confirmation pending.
LRS payments + BNG units (same parcel)
BlockedDEFRA December 2024 guidance. Hard prohibition on same-parcel combination.
LRS payments + Nutrient neutrality credits
Out of scopeThe River Ure is not on Natural England's designated nutrient neutrality catchment list (GOV.UK, 11 March 2026). Statutory nutrient credits are therefore not available to Ure Dales land, regardless of LRS rules. See the nutrient neutrality page.
BNG units + Nutrient neutrality credits (no LRS)
ConfirmedDEFRA has confirmed BNG and nutrient credits can be stacked on the same land.
Carbon credits + BNG units (no LRS)
Generally permittedBoth are private voluntary markets; can coexist subject to additionality.
Carbon credits + Nutrient neutrality credits (no LRS)
Generally permittedSame basis.
CS Higher Tier + LRS (same parcel)
Not permittedEarly exit from CS is available to enter LRS; cannot run both simultaneously.
SFI actions + LRS
Check per actionSome SFI actions compatible; others not. Depends on whether they overlap with LRS objectives on same land.
The general principle explained
DEFRA’s position is that combining different public and private finance mechanisms is permitted “where achievable without risking environmental integrity of targeted outcomes.” The key test is whether the same ecological benefit is being claimed twice. If the benefit is genuinely additional — beyond what would have happened anyway, and not already funded by another stream — stacking is generally allowed.
The additionality testasks: would this habitat enhancement have happened without the second income stream? If the LRS payment is already funding the wetland, the ecological benefit of that wetland has already been “sold” to DEFRA. Selling it again as a BNG unit or nutrient credit would be double-counting.
The BNG prohibition in detail
In December 2024, DEFRA issued specific guidance closing the route to combine LRS and BNG on the same parcels. This overturned an expectation many landowners and advisers had built into their financial modelling. The key points:
- No BNG units from land within the LRS boundary
- No option to repay LRS and switch to BNG mid-scheme
- Some limited exceptions for ancillary works exist but do not create a general stacking route
See the full BNG page for detail.
What this means for Ure Dales specifically
Our position. Based on current guidance, the following income combinations appear achievable for Ure Dales participants on land within the scheme boundary:
- LRS implementation payments (once agreed with DEFRA) ✓
- Peatland Code carbon credits — subject to DEFRA confirmation ✓ provisional
- Own-land trading income (farming, tourism, timber) ✓ — no scheme interaction
The following are blocked or out of scope:
- BNG units from scheme land — ⛔ blocked
- Nutrient neutrality credits — ⛔ out of scope (the River Ure is not on the designated catchment list, GOV.UK 11 March 2026)
We will update this page as DEFRA confirms the carbon credit stacking position for Ure Dales.
Where to go next
References
- DEFRA: Combining environmental payments — BNG and nutrient mitigation (official GOV.UK guidance)
- DEFRA: Biodiversity net gain — GOV.UK guidance
- SHMA: BNG or Landscape Recovery — double counting guidance (December 2024)
- Strutt & Parker: Stacking ecosystem services payments — guidance
- WCL: Investing in Higher Tier and Landscape Recovery (December 2024)
- DEFRA ELM update — how government will pay for land-based environment and climate goods
- Paludiculture.org: Peatland funding and policy updates 2026–2030
Question about stacking income streams? Email Phil directly at phil@opensourcearts.co.uk or use the contact page. We’ll reply before the 30 April workshop where possible.