Business Clinic: Use share farming to meet greening requirements

Farmers Weekly’s Business expert Doug Jackson gives contract farmers advice on using share farming to meet their greening requirement.

Q: I am concerned that on a contract farming basis I might not be able to meet my greening requirements, but entering into a share-farming agreement has been mentioned as a solution. Is it really that simple?

A: Yes, in isolation, from a greening point of view, share farming is an option. Defra and the RPA accept that with a share-farming agreement you are jointly in occupation of the land, so as long as you demonstrate management control of the land, in principle the claim is legitimate.

The contractor can then add this share-farmed land to a larger claim so all the farmed land contributes to the greening calculations, which can have practical and economic benefits.

The biggest potential pitfall is that the tests for inheritance tax relief may be weakened. The rules require the farmhouse and land to be of common occupation and that you are a controlling mind in the business. Share farming potentially questions both these points.

See also: Business Clinic: Employer liability insurance advice

There are a number of other potential pitfalls. One is including dual use in your environmental stewardship (ES) claim where only one party is the ES claimant. The other is Basic Payment Scheme (BPS) claimants and artificiality, which is the catch-all rule.

If the change from contract farming to share farming is only to comply with greening, it could be deemed artificial and put the whole claim under threat.

The information provided in these articles does not constitute definitive professional advice and is provided for general information purposes only.