Gifts to the Nation Print
There are three schemes whereby HM Revenue & Customs accept artwork, or objects in lieu of Inheritance Tax (“IHT”).
The first scheme allows the executors of an individual’s estate to settle the IHT liability. The second scheme, in respect of pre-eminent artwork and objects, provides for an enhanced relief for the donor’s estate.
The government have now gone one step further to encourage individuals to make lifetime gifts of pre-eminent artwork and objects to the nation by granting tax relief on the value of the object donated. This is called the Cultural Gifts Scheme.
Eligible donors include:
- Individuals acting in a private capacity who have a liability to UK income tax, or CGT; or
- Companies with a liability to UK corporation tax.
Qualifying donors are not liable to CGT or Inheritance Tax on the donation, and are entitled to tax relief of up to 30% of the fair market value in the case of individuals and 20% for companies.
Individuals may spread the tax relief over a maximum period of 5 tax years. Companies do not have the ability to spread the tax relief.
The total value that can be accepted in any one year under these three schemes is £30m.