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Share Farming Agreements: A Practical Guide for UK Farms | LegalDocuments.co.uk

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Part ofFarming and Agricultural Law in the UK

Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
Share farming has become a well-established way for landowners and active farmers in the UK to work side by side without formally handing over occupation of the land. Rather than renting out a farm through a traditional tenancy, both parties run the enterprise in parallel, each contributing different resources and each taking a defined share of the output. For many family farms facing succession questions, retirement planning, or simply a shortage of labour and machinery, these arrangements can open a practical middle path. This guide walks through what a share farming agreement actually is, how it differs from a tenancy or a contract farming arrangement, the commercial and tax considerations that tend to matter most, and the areas where I most often see people tripped up. It is written for landowners, farming families, and new entrants who want to understand the shape of the deal before they sit down to negotiate one.

What this document is

A share farming agreement is a commercial arrangement between two independent businesses, typically the landowner and a working farmer, who agree to farm the same land in parallel. Crucially, each party runs its own separate farming enterprise. They are not partners, and neither is the employee or tenant of the other.

The landowner usually contributes the land, buildings, fixed equipment, and sometimes a share of variable inputs. The share farmer generally brings mobile machinery, day-to-day labour, and farming know-how. Produce and proceeds are then divided between the two in agreed proportions.

This structure sits apart from a Farm Business Tenancy under the Agricultural Tenancies Act 1995, because no exclusive occupation is granted. It also differs from a contract farming agreement, where the landowner engages a contractor to carry out operations for a fee plus a profit share.

Getting the legal characterisation right matters: if the paperwork says 'share farming' but the reality on the ground looks like a tenancy, HMRC or a court may treat it as one, with significant tax and security-of-tenure consequences.

How to use this document

  1. Work out whether share farming actually fits. Before drafting anything, think carefully about what each side genuinely brings to the table and what each wants from the arrangement. Share farming works best where both parties want active involvement and are willing to accept that returns will rise and fall with the farm's performance, rather than being fixed.
  2. Define contributions and shares clearly. The agreement should set out precisely who provides the land, buildings, machinery, inputs, labour, and management time. It should then specify how gross output is divided, how variable costs are apportioned, and how any subsidies, environmental scheme payments, or diversification income are treated between the two enterprises.
  3. Keep the two businesses genuinely separate. Each party should invoice separately, keep their own accounts, register for VAT independently where relevant, and make their own decisions about their own enterprise. Joint decision-making should be limited to a clearly defined committee or consultation process, otherwise the arrangement may drift into looking like a partnership or tenancy.
  4. Address tax, subsidy, and scheme implications early. Inheritance tax reliefs, capital gains tax, VAT, and entitlements under current agricultural support and environmental schemes all depend on who is doing what. Speak to an accountant familiar with agriculture before signing, and make sure the written agreement reflects the commercial reality HMRC would expect to see on inspection.
  5. Plan for review, dispute resolution, and exit. Good agreements include an annual review of budgets and shares, a mechanism for resolving disagreements (often mediation followed by expert determination or arbitration), clear notice periods, and a fair approach to what happens to growing crops, stored produce, and shared costs when the arrangement ends.

Common questions

If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.

Common questions

Q Is a share farming agreement the same as a tenancy?
No. Under a Farm Business Tenancy or an older Agricultural Holdings Act tenancy, the tenant has exclusive possession of the land for a rent. In a share farming arrangement, neither party has exclusive occupation, both are farming the land in parallel, each running their own enterprise. If the paperwork says share farming but one party is effectively in sole occupation paying the other a fixed sum, the courts may treat it as a tenancy regardless of the label.
Q How does share farming differ from contract farming?
In a contract farming agreement, the landowner usually remains the farmer for tax and subsidy purposes and engages a contractor to carry out operations in return for a base fee plus a profit share. In share farming, both the landowner and the share farmer are treated as separate farming businesses in their own right, each with their own share of output and costs. The tax and scheme consequences of that distinction can be significant.
Q Who keeps the agricultural subsidies and environmental scheme payments?
It depends on who holds the entitlements and who is named as the claimant under the relevant scheme. A well-drafted agreement will state clearly how current support and environmental payments are split between the two enterprises. This area changes as schemes evolve, so it is worth checking the latest position on gov.uk before finalising terms.
Q Can share farming help with inheritance tax planning?
In the right circumstances, share farming can support a landowner in remaining an active farmer, which may be relevant to agricultural property relief and business property relief. However, reliefs depend on the landowner's genuine involvement, the nature of the assets, and current tax rules. This is an area where tailored input from an agricultural accountant and tax adviser is essential before relying on any assumption.
Q How long should a share farming agreement last?
Most arrangements run for an initial fixed term, often three to five years, with provision for renewal or rolling continuation after that. A shorter initial term lets both sides test whether the relationship works in practice, while a reasonable length gives the share farmer time to justify investment in machinery and establish rotations. Notice periods and end-of-term provisions should be agreed up front.
Q What happens if one party wants to end the arrangement early?
The agreement should set out the notice required, the grounds for early termination (such as material breach or insolvency), and how assets, growing crops, stored produce, and unpaid costs are dealt with on exit. Without clear wording, disputes often arise over valuations and who is entitled to what. Including a mediation or expert determination clause helps resolve disagreements without immediate recourse to court.
Q Do I need a written agreement, or can it be informal?
A written agreement is strongly advisable. Share farming arrangements touch on tax, subsidies, liability for third-party losses, and the legal characterisation of the relationship. A handshake deal leaves all of that open to argument and increases the risk that the arrangement is recharacterised as a tenancy or partnership. A written document, reviewed by each party's own advisers, is the sensible baseline.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.