Hill farming in UK is experiencing very difficult economic circumstances and many farmers rely on subsidies provided by the government for a large fraction of their income. The Peak District National Park is used as a case study to examine how farmers might respond to current policy changes � in particular, the move from area- and headage-based payments to the Single Farm Payment, and how optimal business plans should respond to these changes. The objective of this paper is thus to develop production models that predict how farmers will respond to changing policy framework conditions. For this purpose socio-economic surveys were carried out on 44 sample farms, in order to investigate how the land is managed on hill farms including ongoing policies and future farm management planning. Based on these surveys a series of representative farm linear programming models was developed, which represent typical farm types in the uplands in the Peak District. In this study the focus is on typical sheep and beef farm type, the most common in this region. This model is used to calculate the effect of different policies, carried out under CAP reform, on incomes, land use and the intensity of production. We also consider the impacts of a complete removal of subsidy.