Conditional Exemption

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

Under the Conditional Exemption scheme, heritage assets such as buildings, land, works of art and other objects that qualify are exempt from inheritance or capital gains tax provided certain conditions are met, in order to protect them from being sold off privately.

Through the scheme, no tax is paid when an asset passes to a new owner on death or is gifted, as long as the new owner agrees to:

  • look after the item
  • allow the public “reasonable access” to it (at least 100 days a year, subject to the object’s condition) and keep it in the UK (if moveable)

If the criteria are not met the exemption may be withdrawn.

Assets that qualify for the scheme are:

  • outstanding historical buildings, estates and parklands and works of art, furnishings, sculptures etc. linked to these or to other historical buildings
  • buildings of outstanding architectural interest
  • land of outstanding historic interest or of outstanding natural beauty and spectacular views including woodlands, heath land etc
  • land of outstanding scientific interest including special areas for the conservation of wildlife, plants and trees
  • paintings, portraits, drawings, watercolours, furniture, sculptures, books, manuscripts, ceramics etc of artistic, historic or scientific interest in their own right

Depending on the asset type, different agencies will decide whether it qualifies for the scheme. These include Arts Council England (ACE), English Heritage, Historic Scotland and Cadw: Welsh Historic Monuments.

In the past this exemption applied mainly to objects in private historic houses, but it is increasingly common for owners to establish loan agreements with museums which then display the items.

Conditional Exemption is a revenue issue overseen by HMRC and does not fall under the responsibility of ACE.

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