An Introduction to Farm Partnership Accounts - How to Avoid Common Errors

Introduction

A number of major challenges are looming over the agricultural sector: rising disputes and draft legislation that will reduce Agricultural Property Relief (‘APR’) and Business Property Relief (‘BPR’) to just 50% after £2.5million (was £1million) allowance from 6 April 2026. Further help is promised via the transferable £2.5million spousal allowance.

These developments could significantly impact succession planning and expose clients to greater capital tax liabilities if planning is not undertaken. Many farming clients are still unaware of how vulnerable their current business structures might be. It is therefore very important to have robust trading accounts that achieve maximum tax relief.

This is where accountants play a crucial role. Protection starts with farm accounts prepared with a forensic understanding of the business - accounts that farmers not only rely on but fully comprehend themselves and can be used to defend tax reliefs. Robust financial records, aligned with the practical realities of the farm, are essential to defend APR and BPR claims that withstand scrutiny from HMRC. The 2025 Budget offered survival opportunities with the £1million (now £2.5million) transferable surviving spouse exemption. It is very important to have accounts that consider the role of the spouse.

As part of succession planning, now is the time to engage proactively with farming clients. Review existing structures, ensure business records support relief eligibility, and help clients future-proof their operations before the legislative changes take effect, and understand the important role of the spouse in the accounts and succession planning. Your expertise in producing strong accounts can make all the difference to help avoid farm disputes and help with succession tax planning.

What You Will Learn

This live and interactive course will cover the following:

• The importance of the farm partnership agreement for accounts preparation (Merryman and Lane)
• The role of farm limited company accounts
• The identification and disclosure of farm research & development (‘R&D’)
• The need for farm accountants to understand the use of land capital accounts and all capital accounts and the role of the spouse
• Disclosure of full details of all drawings and monies introduced for dispute protection
• Working with overdrawn capital accounts - consider valuations
• Full disclosure of accounting policies and the importance thereof
• Full understanding of ownership - legal title and beneficial ownership
• Considerations over values - application of market value v historic cost including notes with reasoning for all parties
• Correct treatment of previous probates, values and distribution to be reflected in the accounts
• Detailed enterprise accounts, especially with new diversification projects help understand the business
• The need to show trading activity to protect business tax reliefs
• The need to show agriculture activity to obtain agricultural tax reliefs (APR etc.)
• The need to understand what qualifies as trading and what qualifies as agriculture
• The correct allocation of overheads against the income sources
• The need to show all farm barter correctly in the accounts
• The importance of reading loan agreements and reflecting in the accounts correctly
• The need to identify gifts v loans and disclose with understanding
• The correct disclosure of fixed assets - repairs v improvements
• Consideration around the accounts and tax treatment of the grain silo, the slurry store and farm buildings with function - capital v income
• The tax efficient disclosure of farm residences and buildings
• Disclosure of carbon credit receipts and all farming for the environment whilst we await the farming for the environment legislation
• The spouse(s) as partners and the need to disclose and consider surviving spouse exemption and £2.5million allowance as part of the tax planning and the correct reflection in the accounts

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.