Acceptance in Lieu

Tax incentives for acquisitions - Acceptance in Lieu - Cultural Gifts Scheme - Private Treaty Sales - Conditional Exemption


Acceptance in Lieu (AIL) is one of the UK’s most longstanding tax incentive schemes for securing cultural objects for the nation. The scheme is administered by Arts Council England (ACE) and gives people an opportunity to offset some or all of their inheritance tax, capital transfer tax or estate duty bill by offering a pre-eminent work of art to a public collection in lieu of payment.

The value of objects donated through AIL is capped at £30m per year, a ceiling shared with the newly introduced Cultural Gifts Scheme.

Since 2004, £224.9m worth of cultural objects has been acquired for the nation through AIL.

Who can offer an object?

Any individual with Inheritance Tax liabilities in the UK can offer an object through AIL.

Who can acquire an object?

Public institutions in the UK, including museums, galleries, archives and libraries, are entitled to receive objects through AIL. Allocations are decided on a case-by-case basis by the AIL panel and must be approved by the culture secretary or minister for each UK nation. 

Although some offers come with a condition or wish as to allocation, the panel does its best to ensure that works acquired via the AIL scheme are fairly and sensibly distributed across the UK.

Benefits to the offeror

AIL is a form of payment rather than a charitable gift and there are significant benefits for offerors. Because tax would have to be paid on an object sold privately, items are generally worth 17% more if offered in lieu of tax than if sold on the open market at the same price.

In more tangible terms, if an item from an estate liable for inheritance tax was sold for £100,000 on the open market, 40% of that would go to HMRC and so the seller would receive £60,000. If the object was given to the nation for the same value under the AIL scheme, a quarter of the tax that would have been paid (i.e. £10,000) goes back to the estate, meaning the object has a tax settlement value of £70,000.

The offeror gets a reduction to the amount of tax payable on the estate and the object accepted is not brought into account in calculating the taxable estate.

Benefits to the institution

For public collections in the UK, AIL is one of the most important means of acquiring significant art, cultural and heritage objects. It is also an essential means of enabling objects on long-term loan to be acquired and objects of local interest to be retained in the appropriate area. In most cases, acquisitions come at no cost to the institution, except where the object’s value exceeds the tax liability owed.

How the scheme works

Objects must first be offered to HMRC and are then passed to the AIL panel to be assessed for their eligibility and value under a defined set of criteria. It is important to mention here that items can be judged to be pre-eminent on a local and regional level as well as in a national or international context, so the scheme does not just benefit national collections.

The pre-eminence criteria used in assessing objects offered in lieu are:

  • Does the object have an especially close association with our history and national life?
  • Is the object of especial artistic or art-historical interest? Is the object of especial importance for the study of some particular form of art, learning or history?
  • Does the object have an especially close association with a particular historic setting?
  • The panel will look at valuation and agree on a market price fair to both the vendor and the nation.

In situ arrangements mean objects can sometimes remain in privately-owned houses of origin on condition of public access, while ownership passes to an administering museum; this aspect of the scheme has enabled more objects to be made available to visitors in the regions.

Offers often come through solicitors or auction houses, but public institutions also have an important role to play in establishing and developing relationships with potential offerors, who can indicate a preference for which venue they would like to receive the work.

Establishing prior relationships is also important because it means that people may settle their Inheritance Tax liabilities through AIL while still alive, giving a much greater guarantee against objects being sold off privately after death.

ACE’s Collections and Cultural Property unit provides literature on establishing a relationship with potential offerors and can also provide a legal clause detailing what can be donated that can be brought to an offeror’s solicitor.

Click here to download the arts council’s guidance notes.

Allocation of objects

Eligible museums, particularly those who have not previously received an object through AIL, are encouraged to apply for items that are currently available for allocation. A list of items currently available for allocation is available on the arts council website:

According to the arts council guidance, applications should consider:

  • how the object is appropriate to the applicant's collection and the context of the object within the permanent collection of the applicant
  • how public access will be provided. For items accepted in lieu the presumption must be that they will be on open public display for the majority of the time, subject to conservation restraints for those items which are sensitive to light. Details should also be given as to what access arrangements would be put in place when not on display, if appropriate, and how members of the public are made aware of these
  • the educational programme of the applicant and how the object would be integrated into that programme

The arts council’s Collections and Cultural Property unit provides literature and both formal and informal advice on all of the matters outlined here.

Contact the unit’s senior advisor Anastasia Tennant for further information.

General links and resources

The Art Fund: A guide to giving art

Arts Council England: tax incentive schemes

The Heritage Lottery Fund
The Art Fund

The National Heritage Memorial Fund

Scotland’s National Fund for Acquisitions

V&A Purchase Grant Fund

Preservation of Industrial and Scientific Material (PRISM) fund: England and Wales

Northern Ireland Museums Council acquisition fund