I run a 70-hectare mixed farm in the midlands that I’ve gradually built up over the past 20 years. The farm is thriving, but I’m now in my early 60s and starting to think seriously about handing things over. I hope to pass the farm onto my son within the next 8-10 years. He’s 32, and currently working full-time off-farm but has a keen interest in farming and taking over the farm in time. I’m wondering whether a formal farm partnership is something we should consider? What are the advantages, and are there any pitfalls we should be aware of? I want to be fully prepared so there are no unpleasant surprises for either of us.
Answer: It’s never too early to start planning for farm succession. Getting ahead of it ensures a smoother, more successful transition for everyone involved. A farm partnership could be a good fit for your situation. It offers a range of benefits and can be a great way to ease into succession. Let’s explore what a partnership involves.
What is a partnership?
A partnership is a legal arrangement where two or more people jointly own and manage a business. On a family farm, it creates a structured way for both generations to work together, share responsibility, and gradually transition the farm’s operation and ownership.
You should consider the advantages of a farm partnership.
1. Gradual handover: a partnership provides a gradual handover, allowing the next generation to get involved step-by-step. This is particularly helpful as your son works off-farm. It allows him to build experience and confidence gradually, without jumping straight in.
2. Shared skills and resources: by teaming up, you don’t just combine finances, but also experience and introduce fresh ideas. Your son may bring valuable insights from his off-farm job that could enhance your business. Together, you can pool both practical know-how and innovative thinking to grow the farm.
3. Tax benefits: income from a farm partnership can be split between both parties, which may reduce the overall tax liability arising. This structure often proves more tax-efficient and flexible than other arrangements. Agreed partner salaries and profit share can maximise tax efficiency and also be adjusted to meet your respective income needs which may change from year-to-year.
4. Grant opportunities: since your son is under 40, you may be eligible for the Young Trained Farmer grant under the TAMS scheme, provided the partnership is properly registered. This could open opportunities for further investment in the farm.
Points to keep in mind
1. Legal and financial: setting up a partnership means creating a formal agreement. This document should clearly outline roles, responsibilities, profit-sharing, and how decisions will be made.
It’s your roadmap, so the clearer it is, the less room there is for confusion or disagreements later.
2. Communication is key: strong partnerships depend on good communication. From small daily tasks to big picture planning, being aligned is crucial. Talk about how you’ll manage things together - who does what, how you’ll solve disagreements, and how you’ll review progress.
3. Plan for change: what happens if one of you wants out, gets ill, or if circumstances change? A good partnership includes a well-thought-out exit strategy. Sorting this now avoids stress and conflict in the future.
4. Professional advice: professional support is a must. Engage an advisor who understands agricultural partnerships, they can help structure the agreement to suit your needs, and ensure you tick all the boxes on tax, grants, and compliance.
Forming a partnership could be a very smart, future-focused move for your family. It creates a stepping stone between now and full succession, reducing pressure while keeping the farm’s future bright. With the right preparation and advice, particularly if you are considering transferring your farmland, you’ll be in a strong position to make this arrangement work for both of you.
With the right preparation, you can make the transition smooth, fair, and positive for both generations and the farm.
Drafting a farm partnership agreement: a clear written agreement is essential for a successful partnership. Here’s what to include:
Key sections:
Roles and responsibilities.Profit/cost sharing.Land and asset use.Decision-making processes.Exit and succession plans.Dispute resolution.Grant/scheme requirements.Who to involve:
You and your successor.Agricultural advisor.Solicitor and accountant.Your bank (if relevant).
Marty Murphy.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
I run a 70-hectare mixed farm in the midlands that I’ve gradually built up over the past 20 years. The farm is thriving, but I’m now in my early 60s and starting to think seriously about handing things over. I hope to pass the farm onto my son within the next 8-10 years. He’s 32, and currently working full-time off-farm but has a keen interest in farming and taking over the farm in time. I’m wondering whether a formal farm partnership is something we should consider? What are the advantages, and are there any pitfalls we should be aware of? I want to be fully prepared so there are no unpleasant surprises for either of us.
Answer: It’s never too early to start planning for farm succession. Getting ahead of it ensures a smoother, more successful transition for everyone involved. A farm partnership could be a good fit for your situation. It offers a range of benefits and can be a great way to ease into succession. Let’s explore what a partnership involves.
What is a partnership?
A partnership is a legal arrangement where two or more people jointly own and manage a business. On a family farm, it creates a structured way for both generations to work together, share responsibility, and gradually transition the farm’s operation and ownership.
You should consider the advantages of a farm partnership.
1. Gradual handover: a partnership provides a gradual handover, allowing the next generation to get involved step-by-step. This is particularly helpful as your son works off-farm. It allows him to build experience and confidence gradually, without jumping straight in.
2. Shared skills and resources: by teaming up, you don’t just combine finances, but also experience and introduce fresh ideas. Your son may bring valuable insights from his off-farm job that could enhance your business. Together, you can pool both practical know-how and innovative thinking to grow the farm.
3. Tax benefits: income from a farm partnership can be split between both parties, which may reduce the overall tax liability arising. This structure often proves more tax-efficient and flexible than other arrangements. Agreed partner salaries and profit share can maximise tax efficiency and also be adjusted to meet your respective income needs which may change from year-to-year.
4. Grant opportunities: since your son is under 40, you may be eligible for the Young Trained Farmer grant under the TAMS scheme, provided the partnership is properly registered. This could open opportunities for further investment in the farm.
Points to keep in mind
1. Legal and financial: setting up a partnership means creating a formal agreement. This document should clearly outline roles, responsibilities, profit-sharing, and how decisions will be made.
It’s your roadmap, so the clearer it is, the less room there is for confusion or disagreements later.
2. Communication is key: strong partnerships depend on good communication. From small daily tasks to big picture planning, being aligned is crucial. Talk about how you’ll manage things together - who does what, how you’ll solve disagreements, and how you’ll review progress.
3. Plan for change: what happens if one of you wants out, gets ill, or if circumstances change? A good partnership includes a well-thought-out exit strategy. Sorting this now avoids stress and conflict in the future.
4. Professional advice: professional support is a must. Engage an advisor who understands agricultural partnerships, they can help structure the agreement to suit your needs, and ensure you tick all the boxes on tax, grants, and compliance.
Forming a partnership could be a very smart, future-focused move for your family. It creates a stepping stone between now and full succession, reducing pressure while keeping the farm’s future bright. With the right preparation and advice, particularly if you are considering transferring your farmland, you’ll be in a strong position to make this arrangement work for both of you.
With the right preparation, you can make the transition smooth, fair, and positive for both generations and the farm.
Drafting a farm partnership agreement: a clear written agreement is essential for a successful partnership. Here’s what to include:
Key sections:
Roles and responsibilities.Profit/cost sharing.Land and asset use.Decision-making processes.Exit and succession plans.Dispute resolution.Grant/scheme requirements.Who to involve:
You and your successor.Agricultural advisor.Solicitor and accountant.Your bank (if relevant).
Marty Murphy.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
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