Museum and gallery organisations have criticised the small print in the government’s proposed tax incentive scheme to encourage more donations of objects and works of art.
The scheme will allow living donors to receive tax relief in the year of their donation based on a percentage of the gift’s value – initially fixed at 25%.
Despite welcoming the proposal as a whole, several organisations responding to a HM Revenue and Customs (HMRC) consultation, which closed last month, expressed disappointment that the incentive would share its annual tax relief limit with the existing Acceptance in Lieu (AIL) scheme, which offers inheritance tax discounts in exchange for bequests.
Under HMRC’s plans, the AIL’s tax relief cap of £20m will not rise to accommodate the living donor incentive.
National Museum Directors’ Conference (NMDC) spokeswoman Lizzie Glithero-West said a shared limit would lead to “inevitable conflict” between the two schemes.
The Art Fund pointed out that offers to the AIL scheme this year had already reached a tax relief value of £37m, far exceeding the existing limit.
In addition, Glithero-West said that, while the AIL cap is only a nominal figure, the proposals indicated that under the new scheme it will be treated as a fixed limit that cannot be exceeded.
The Museums Association (MA) argued that donors could be discouraged and valuable works lost to the nation if the cap is not raised.
In addition, the MA, the Art Fund and the NMDC all criticised the government’s proposal that donated works should be owned by the nation and loaned to recipient museums. This contrasts with the AIL scheme, under which recipient museums gain full ownership.
The MA’s head of policy and communication, Maurice Davies, said the proposed approach would cause “unnecessary complexity and continuing bureaucracy and transaction costs”.
The NMDC said it would discourage donors and institutions from establishing “close and trusting relationships”.
The scheme will allow living donors to receive tax relief in the year of their donation based on a percentage of the gift’s value – initially fixed at 25%.
Despite welcoming the proposal as a whole, several organisations responding to a HM Revenue and Customs (HMRC) consultation, which closed last month, expressed disappointment that the incentive would share its annual tax relief limit with the existing Acceptance in Lieu (AIL) scheme, which offers inheritance tax discounts in exchange for bequests.
Under HMRC’s plans, the AIL’s tax relief cap of £20m will not rise to accommodate the living donor incentive.
National Museum Directors’ Conference (NMDC) spokeswoman Lizzie Glithero-West said a shared limit would lead to “inevitable conflict” between the two schemes.
The Art Fund pointed out that offers to the AIL scheme this year had already reached a tax relief value of £37m, far exceeding the existing limit.
In addition, Glithero-West said that, while the AIL cap is only a nominal figure, the proposals indicated that under the new scheme it will be treated as a fixed limit that cannot be exceeded.
The Museums Association (MA) argued that donors could be discouraged and valuable works lost to the nation if the cap is not raised.
In addition, the MA, the Art Fund and the NMDC all criticised the government’s proposal that donated works should be owned by the nation and loaned to recipient museums. This contrasts with the AIL scheme, under which recipient museums gain full ownership.
The MA’s head of policy and communication, Maurice Davies, said the proposed approach would cause “unnecessary complexity and continuing bureaucracy and transaction costs”.
The NMDC said it would discourage donors and institutions from establishing “close and trusting relationships”.
