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Tax benefits from works of art
Tax benefits related to donations of pre-eminent works of art and other objects of cultural and social value are in line to increase significantly, as outlined in this year’s Budget.
Since 2001, objects and artwork worth over £235m have been donated as a part of the Acceptance in Lieu scheme, a number expected to increase under a regime of greater tax benefits.
Richard Cartwright, a partner in Saffery Champness’ Bristol office, commented:
“As promised in the Budget, the Government has now launched its consultation into gifts of pre-eminent objects and works of art to the nation. The scheme will allow donors to leave gifts of cultural significance in return for tax concessions they can enjoy while alive.
“Under the current Acceptance in Lieu scheme, donors are encouraged to give irrevocable gifts of art to the public, the market value of which is deducted from Inheritance Tax on death. The scheme has been an undeniable success, and the volume of artefacts coming to populate our public galleries and museums through this system is nothing short of astonishing.
“The drawback of course is that donors cannot themselves benefit from this as tax is not offset until death. Although the Acceptance in Lieu scheme is likely to continue, the new proposals will improve it and allow people to enjoy the tax benefits of giving on death while still alive.
“The Government proposes taking a percentage of the value of the proposed gift, say 25%, and offsetting this against an individual or corporation’
“If this ends up encouraging people to leave great works of art to the public – whilst reaping additional tax benefits in the process – we can only benefit from the improvement in preserving our culture and heritage here in Britain.”