Is Your Farming Partnership Built on Solid Ground?

Farming partnerships are the backbone of family agriculture in the UK. They let land, labour and capital be pooled across generations, helping farms grow and thrive in ways individual ownership often can't.

The handshake deal and the shared cup of tea at the kitchen table can feel like a perfectly good foundation for a partnership that's run for decades, and for many Yorkshire farming families, that's exactly how things have always been done.

So, what is a farming partnership? It's simply two or more people running a farm business together and sharing its profits, a straightforward idea that's easy to set up but easy to get wrong on paper. A farming partnership agreement, or a farm partnership agreement if you prefer the shorter term, is what actually sets out how that works in practice.

A lot of family farms across Yorkshire are still trading on a verbal understanding, or on a written agreement that hasn't been looked at since it was first signed, sometimes a generation ago. Whether you're the generation who set the partnership up decades ago, the next generation about to join it, or you're setting up a farm partnership for the first time, the working farm depends on legal foundations that most partners have never actually seen written down.

That's not unusual, and it's nothing to feel awkward about, but the legal reality can be very different from what everyone assumes, and the consequences of getting it wrong can be serious.

At Crombie Wilkinson Solicitors, we work with farming families across our York, Selby, Malton or Pickering offices, and as a firm recognised on the NFU Legal Panel for the North, one of the most common issues we come across is partnerships operating without a written agreement, or with one that's seriously out of date. In an industry where the assets at stake, land, property, machinery, livestock and farming tenancies, can be worth millions, that's a risk no family should take.

The default position: what the Partnership Act 1890 does to your farm

If your farming partnership has no written agreement or your agreement is silent on a key issue, the law fills the gap for you, specifically, the Partnership Act 1890.

This Victorian legislation takes a blunt approach: profits and losses are shared equally between partners, regardless of who owns the land, who does the work, or who put in the most capital. For most farming families, that bears little resemblance to what was actually intended.

The 1890 Act doesn't stop there. Left to its default rules, ordinary business decisions are settled by a simple majority of partners, with no built-in mechanism to break a deadlock.

There's no automatic right to expel a partner, even one who's no longer pulling their weight or who's acting against the partnership's interests. And, perhaps most seriously, the Act treats a partnership as automatically dissolved the moment any partner dies, unless your agreement says otherwise.

Automatic dissolution on death: the hidden succession trap

This last point is worth pausing on, because it's the single biggest risk in an unwritten or outdated agreement, and one that's easy to miss until it happens.

If a partnership dissolves automatically on a partner's death, that can disrupt trading overnight, cause problems with banking arrangements, and put subsidy claims, such as the Sustainable Farming Incentive, at risk while everything is untangled.

A well-drafted agreement can contract out of this default entirely, allowing the partnership to continue smoothly with the surviving partners while the deceased partner's share is dealt with in an orderly way.

This is different from choosing to dissolve a farming partnership deliberately, which a good agreement can also set out a clear, planned process for, rather than leaving it to the Act's default rules.

What happens when there is no agreement: lessons from Procter v Procter (2024)

The same issue arises when a partner retires or passes away. A recent Court of Appeal case, Procter v Procter (2024), showed just how costly the absence of clear retirement provisions can be. In that case, a family farming partnership had a written agreement, but it said nothing about what would happen when a partner left. The result was costly litigation to work out the retiring partner's entitlement.

The court confirmed that a retiring partner keeps the value of their share in the partnership assets at the date of retirement, assessed at market value rather than book value, a distinction that can make a very significant difference in practice.

On a farm where land has been in the family for generations, book value might show a modest figure on the balance sheet, while the true market value could run into millions. If the partnership doesn't have the cash to match that, the result can be a forced sale of land just to fund the buyout.

Procter isn't an isolated case either. In Ham v Ham, the courts reached a similar conclusion in a farming context, reinforcing that outgoing partners are entitled to the true value of their share unless the partnership agreement says otherwise. Taken together, these cases make clear that silence in a partnership agreement doesn't protect a family farm; it exposes it.

What a robust farming partnership agreement should cover

A well-drafted farming partnership agreement addresses the full lifecycle of the business, not just its day-to-day running. Here's what a robust farming partnership agreement should cover.

Capital, profits and drawings

How profits and losses are divided, whether equally, in proportion to capital contributions, or through a more bespoke arrangement that reflects each partner's role.

The agreement should also set out how capital accounts are treated and how drawings are managed, so everyone knows what they're entitled to take out of the business and when.

Partnership assets vs personal assets

This is the single most misunderstood area in farming partnerships. The agreement needs to be explicit about which land, buildings, machinery and livestock belong to the partnership, and which belong to individual partners personally.

Farmland owned by one family member but farmed by the partnership without any formal arrangement can create serious complications, particularly on death, where inheritance tax planning considerations and succession planning come into play. Getting this distinction right matters for how relief is calculated and can make probate considerably more straightforward for the family left behind.

Decision-making and authority

Day-to-day decisions are one thing, but the agreement should set out which decisions require unanimous agreement, such as selling land, taking on borrowing, or admitting a new partner, and who has the final say if partners can't agree.

Without this, the 1890 Act's simple majority rule applies by default, which rarely reflects how a family actually wants big decisions made.

Admitting, retiring and removing partners

Notice periods, valuation methods (book value versus market value, a distinction Procter makes explicit), payment terms, and any restrictions on who can become a partner should all be set out clearly. This is the area most likely to end up in dispute if it's left vague, so it's worth getting right from the outset.

Death, incapacity and continuity

As covered above, a good agreement contracts out of the 1890 Act's automatic dissolution on death, allowing the partnership to continue with the surviving partners.

It should also address what happens if a partner loses capacity, and align with the family's wills and any lasting powers of attorney, so the partnership and personal estate planning work together rather than against each other.

Dispute resolution

Even the best relationships hit disagreements, and a good agreement plans for how a farming partnership dispute is resolved before it becomes one.

Mediation-first clauses, arbitration, and expert determination for valuation disputes can help resolve disagreements without the cost, delay and family strain of court proceedings. If formal resolution is ever needed, our dispute resolution team can advise alongside the agricultural side of your case.

Partnership agreements and inheritance tax: the 2026 reforms you cannot ignore

From the Autumn Budget, the rules around Agricultural Property Relief and Business Property Relief are changing for deaths after 5 April 2026.

100% relief will be capped at £2.5 million combined across both reliefs, with qualifying value above that threshold receiving 50% relief instead. For many farming families, that's a significant shift from the current position, and it makes how your partnership agreement treats land more important than it's ever been.

Why the land in the partnership matters more than ever

Whether land is held as a partnership asset or owned personally by one partner can directly affect the availability and rate of relief available on it.

This is a specialist area, and the right answer depends on your family's specific circumstances, but it's worth reviewing your agreement now, ahead of April 2026, alongside advice from our inheritance tax planning team, rather than waiting until the reform takes effect.

Reviewing an existing agreement: when was yours last looked at?

If your partnership agreement predates recent diversification, such as holiday lets, solar, anaerobic digestion or contract farming, predates the current generation of partners, or predates the 2024 to 2026 tax reforms, it's very likely out of date. As a general rule, it's worth reviewing your agreement roughly every five years, and whenever partners change, land changes hands, or the business takes on a new diversification activity.

Common objections, and why they don't hold up

One reason farming families often put off getting proper legal advice is that raising the subject can feel awkward, as if planning for disagreement is somehow a sign of distrust. In our experience, it's the opposite. Here are three objections we hear often, and why they don't really hold up.

“We all know where we stand.” The next generation may not, and even within the current generation, knowing where you stand rarely survives contact with a real dispute, a death, or a divorce elsewhere in the family. A written agreement means everyone is working from the same understanding, not just the people who were in the room when it was agreed.

“It will cause an argument.” In our experience, a clear, written agreement actually strengthens family relationships by removing ambiguity, not the other way around. The real arguments tend to happen later, when there's no agreement to fall back on and everyone is relying on memory and goodwill under pressure.

“It's too expensive.” Set against the cost of a contested dissolution, forced land sales, or losing valuable inheritance tax relief because the agreement wasn't reviewed in time, the cost of getting proper advice now is modest. Prevention is almost always cheaper than a cure.

Farming partnerships carry unique complexities, farm business tenancy arrangements, succession to agricultural property, and the interplay between partnership assets and individual estates. These deserve tailored legal advice, not a standard template.

How Crombie Wilkinson supports Yorkshire farming families

At Crombie Wilkinson, our farming and agricultural solicitors are recognised on the NFU Legal Panel for the North, and we work closely with the Federation of Young Farmers' Clubs, so we understand farming families and the pressures they're under, not just the legal issues on paper.

Amy Clarkson, our Head of Agricultural Law, leads a team that reviews and drafts farming partnership agreements across Yorkshire, combining agricultural law, private client and dispute resolution expertise under one roof, so however your situation is shaped, you're not passed between firms to get the full picture.

Book a farm partnership review

If your partnership agreement hasn't been reviewed recently, or doesn't exist at all, now is the time to act. Contact a member of our Agricultural Law team for a confidential conversation about your partnership, available in person at our York, Selby, Malton or Pickering offices, or by video call if that suits you better.