Is a company still a useful partner in a farming partnership?

22nd Sep 2026

Author: Kerry Edwards

A limited company can still be a useful partner in a farming partnership, but the arrangement needs a clear commercial purpose and should work alongside the partnership agreement, ownership of the farm and the family’s succession plans.

Historically, companies were sometimes introduced into farming partnerships because of the difference between corporation tax and the tax paid by individual partners. Changes to the tax rules mean the position is now more complex and tax should not be the sole reason for retaining a company within a farming partnership.

That does not mean a company should automatically be removed. Instead, farming families should consider whether the structure still works for the business today and supports their plans for the future.

Corporate Solicitor Kerry Edwards explains some of the issues to consider.

The role of a company in a farming partnership

A company should have a clear purpose within the farming business.

It may provide capital, retain profits for future investment or have another defined role within the wider business structure. What matters is that its involvement has a genuine commercial rationale and is properly reflected in the way the partnership operates.

Where the company has been part of the farming partnership for many years, the original reasons for introducing it may have changed. The business may have grown, different family members may now be involved or the tax advantages which originally influenced the structure may have reduced.

That does not necessarily mean the company is no longer useful. It does, however, make it sensible to review whether it still serves the purpose for which it was intended.

Making sure the farming partnership agreement is up to date

Where a company is a partner, its role and rights should be clearly set out in the partnership agreement.

The agreement should deal with matters including each partner’s interest in the business, how profits are shared, how decisions are made and what happens when a partner joins, retires or dies.

Farming arrangements often evolve informally over time. The way the family actually operates the business may therefore be different from the position recorded in the partnership agreement.

That difference may not cause an immediate problem, but it can become important following a retirement, death, incapacity, dispute or change in ownership.

Reviewing the partnership agreement gives the family an opportunity to make sure the written arrangements, the company’s involvement and the way the farm actually operates continue to match.

Farmland ownership and partnership assets

Farmland ownership is often one of the most important issues when reviewing a farming partnership.

Land and other key assets may be owned by individual family members, jointly by partners or as part of the partnership itself. Over time, it is not always obvious whether the legal ownership reflects the way the land is treated within the farming business.

Before any restructuring takes place, it is therefore important to establish who owns the land and other significant assets and whether they are partnership property.

Moving land or buildings into or out of a partnership can have significant legal and tax consequences. Legal advice and advice from your accountant should therefore be considered together before changes are made.

Money moving between the company and farming partnership

The way money passes between a company and the farming partnership also needs careful consideration.

A company may retain profits, provide funding or make loans to the partnership. Those arrangements can have tax consequences and may affect whether the structure continues to work in the way the family expects.

The precise tax position will depend on the circumstances, so bespoke advice from the farming business’s accountant should sit alongside legal advice on the structure.

Looking at both together can help avoid making a change for one reason which creates an unintended consequence elsewhere.

Succession planning for farming partnerships

A structure which works well for the current generation may operate very differently when someone retires, dies or the next generation becomes involved.

This is particularly relevant where a company has built up an interest in the farming business over time, as transferring, reorganising or ultimately bringing that interest to an end may add complexity.

The partnership agreement, company documents, ownership of the farm, wills and wider succession arrangements should therefore complement one another.

It is also sensible to consider how a partner can leave the business, how their interest will be valued and how any payment due to them will be funded. Planning for these events in advance can make future changes easier to manage.

When to review your farming partnership structure

There is no automatic reason to remove a company from a farming partnership simply because some of the historic tax advantages have reduced. Equally, a company should not remain part of the structure simply because it has always been there.

The important point is whether the arrangement continues to have a clear commercial purpose and supports both the current farming business and the family’s longer-term plans.

If your farming partnership has included a company for some time, or the needs of the farm and family have changed, a joined-up review can help establish whether the structure still works as intended.

At Butcher & Barlow, our Corporate & Commercial Team works closely with our Agriculture & Rural Team and Private Client Department, alongside our clients’ accountants and other professional advisors. Together, we can consider the partnership agreement, business structure, land ownership and succession plans to help ensure they continue to work for both the farm and the family behind it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information in this article was correct at the time of publication. The information is for general guidance only. Laws and regulations may change, and the applicability of legal principles can vary based on individual circumstances. Therefore, this content should not be construed as legal advice. We recommend that you consult with a qualified legal professional to obtain advice tailored to your specific situation. For personalised guidance, please contact us directly.