You’ve probably heard about the proposed changes to inheritance tax (IHT) on farms with effect from April 2026. There are calls to delay the scheme. Meanwhile, it’s a good time to review the way your farm is held…

It’s crucial to know how your farm is owned.

Is your farm held as joint tenants?

With a joint tenancy, each owner has an undivided equal interest. On death, the land passes to the survivor. You can’t leave your share in your Will as it passes outside your estate.

Farming families often create joint tenancies by accident, without realising the IHT consequences. Also, it can lead to unintended transfers on death and break the farm apart.

Is your farm held as tenants in common?

With tenants in common, each person owns a specific share, such as 50:50 or 60:40. On death, their share can be passed on as stated in their Will, or inherited in line with the rules of intestacy.

This is a better option for partnership property. It’s usually the right structure when you want the land to stay within the partnership or pass to the next generation in a planned way. It’s also easier for accounts and tax planning.

Is your farm held in partnership?

A partnership is formed by ‘persons carrying on a business in common with a view of profit’. As such, the partners in a partnership can be individuals, corporations, other partnerships or a combination of these​.

The shares in a partnership can be difficult to define, and it can be complicated to understand how ownership and value is divided between the partners.

There is a clear distinction between “partnership property” and “separate property”.​

Partnership property is owned by the business and reflected in the balance sheet. Capital profits and losses relating to partnership property belong to the partnership.

It includes all property and rights and interests in property, whether originally brought into the partnership or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business.

Partnership property must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.

Separate property belongs to one or more of the partners outside the firm, but is used by the business. In a farming partnership, land may be held by one or more partners outside the balance sheet, but be occupied and used by the partnership.

The partnership agreement and accounts should be crystal clear about who owns what and what happens on death.

On death, partnership property gets divided according to the partnership accounts, not survivorship rules.

If the farm is jointly owned but not recorded as partnership property, the land might pass outside the partnership on death, so breaking up the farm unexpectedly.

What this means to you

To avoid future problems, you need clear documentation. That’s where we can help.

We are experts in agricultural law, and understand the issues facing farming businesses. For more information, please see our page on Agriculture & the Environment or call us on 01938 552545 and ask for Caroline, Rachel or Lowri.

This information builds on our previous article Farmers and IHT.