Share Farming Agreements

Published 24 March 14

A typical share farming agreement involves the owner or tenant of farm land (the landowner) and a working farmer (the share farmer), who enter into a contract to jointly farm the same land.

Share farming or share milking arrangements are a means of allowing a farmer to retain his land and buildings and still take an active interest in how the farm is run, while relinquishing a large degree control of his business and withdrawing from the day-to-day farm work.

Share farming arrangements ensure that the landowning farmer will still be considered to be running a farming business in the eyes of Her Majesty's Revenue and Customs (HMRC) and can continue to benefit from the Inheritance Tax, Capital Gains Tax and Income Tax advantages of being treated as a farmer. However, HMRC has commented that to fully meet the rules on genuine share farming agreements, the landowning farmer must have some involvement in the day-to-day management of the business.

Share farming contracts can be written to suit the particular circumstances and often involve:

  • The landowner providing the farm land and buildings, fixed equipment and machinery and being responsible for major maintenance of the buildings
  • The share farmer providing labour, field and mobile machinery and expertise
  • The sharing of costs such as fertilisers and feed
  • The ownership of livestock being shared on the basis that each party owns a share in each animal
  • Each party being responsible for their own tax and VAT returns and the production of their own accounts

One primary advantage of share farming is that it enables a landowner, who may be someone with years of experience of farming the land concerned to farm as a joint venture with a neighbouring farmer or someone with agricultural training and expertise who does not own or rent land but who wishes to farm on their own account.

DairyCo have template contracts available for producers to use in their businesses, please email for copy.