Cultural Gifts Scheme

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

Although people can choose to offset their inheritance tax while still alive through Acceptance in Lieu (AIL), the UK has for a long time lacked an incentive to specifically encourage lifetime donations of cultural objects.

This changed with the introduction of the Cultural Gifts Scheme, which launched in April 2013 and aims to address that gap.

The scheme has the potential to bring significant benefit to the sector. It encourages people to donate a pre-eminent work of art or heritage object to the nation (the same criteria as AIL apply) within their lifetime in exchange for a partial offset of their income, capital gains tax or corporation tax bill.

Who can offer an object?

Both individuals and companies can offer an object. To be eligible, offerors must have a tax liability in the UK and wholly own the object or collection; jointly-owned objects or those held in trust cannot be donated.

Benefits to the offeror

Individuals get a reduction of their income or capital gains tax bill worth 30% of the value of the object. Companies can offset corporation tax at 20% of the object’s value. To maximise the benefit, individuals (but not companies) can spread their tax reduction over five years, starting with the year they registered the donation.

How does the scheme work?

The scheme will work in a similar way to AIL, with objects assessed by the same panel and allocated to institutions with approval by the culture secretary or minister in each nation.

Objects are advertised for allocation to museums in the same way as they are under AIL. A list of items currently available for allocation is available on the arts council website: www.artscouncil.org.uk/what-we-do/supporting-museums/cultural-property/tax-incentives/items-allocation/

Guidance on making an application for an object under the scheme is available here.

Like AIL, museums are encouraged not to just wait for objects to come to them but to be proactive about raising awareness of this new incentive scheme and use it to build relationships with companies and individuals.

The arts council advises museums to contact Anastasia Tennant at anastasia.tennant@artscouncil.org.uk for further information on the scheme.

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