Death and taxes (and art)
November 12 2012
Picture: Tate/AIL
The UK government's Acceptance in Lieu scheme (where estates can effectively sell an item of national heritage to the government in place of death duties) has published its annual report. This year the scheme has reached its £20m allowable maximum, meaning that a number of items have had to be deferred to next year. From the report's introduction, written by the committee's chairman Tim Knox:
There was a dramatic increase in the value of items accepted in 2011/12: £31.3 million with £20 million of tax settled, as opposed to £8.3 million with £4.9 million tax settled the previous year. Both years considered similar numbers of cases, but a number of very valuable items in 2011/12 – the Rubens grisaille sketch, three other major Old Master pictures, and the Mountbatten archive – pushed us to the £20 million threshold for the AIL scheme. A further £10 million worth of pre-eminent items considered in 2011/12 had to be deferred until the next year’s AIL budget, as we were not permitted by HM Treasury to exceed the £20 million threshold, as had been permitted in former, albeit more prosperous, years. This increase was not due to any relaxation in our strict criteria for judging and valuing offers, but rather reflects the arbitrary and unpredictable nature of death and inheritance, and the dramatic increase in value of certain types of works of art.
The nation has gained some very fine paintings through the scheme this year. They include Guercino's Samian Sibyl, from the Mahon collection (now allocated to the National Gallery), a full-length of Miss Maria Gideon and her brother, William, by Joshua Reynolds (now at Tate), and a Rubens sketch for the Triumph of Venus (now at the Fitzwilliam).
Personally, I object to paying tax in order to die. So while the AIL scheme is run very fairly and properly (even sometimes allowing objects to remain in situ, as at Houghton Hall for example), I often think it's sad when great paintings lose association with the families who have long held them, and in many cases commissioned them. I cannot be sure of the exact figures, but I would bet that over the last century more of our great art has been lost overseas to pay death duties than for any other single reason.
The recent case of the Duke of Rutland's Poussin's shows how the system works, or rather doesn't. The five Sacraments had long been on loan to the National Gallery in London. When the present Duke inherited his title and Belvoir Castle in 1999, he was faced with immediate death duties of £10m, a backlog of repairs to the castle of £6.5m, and annual running costs of £500,000. To help pay the death duties and repairs, the Duke decided to sell Poussin's Ordination, which went to the Kimbell museum in Texas for £15m.
Then, the remaining four Sacrements went on loan to the Dulwich Picture Gallery. However, the sale of Ordination in turn triggered another round of death duties, so Poussin's Extreme Unction had to be sold. It was valued at £14m, but the Fitzwilliam was able to buy it for £3.9m after the Treasury agreed to waive the remaining balance due in tax.
Now, if you're an 'art belongs to everyone' type and want all privately owned pictures to be in public museums, then death duties are the most effective way of achieving that. But the old reactionary Tory in me is uncomfortable at the state taking private possessions away from people, just because their great-great-great-grandfather happend to buy something nice. In this case, the effect was to break up a loan of all five Sacraments at the National Gallery, the loss of one picture to the US, and the acquisition, in large part funded by the state, of one picture at the Fitzwilliam. We have gone from all five paintings being on public display, side by side, to just one. That feels like a net loss to me. Poussin's second Sacrements series, which is complete and belongs to the Duke of Sutherland, is on loan to the National Gallery of Scotland. If that set was broken up in a similar manner, we would all regret it.
A more effective way of getting privately owned art on public display, and prevent grubby dealers like me from selling pictures overseas, would be to have a tax concession for loaning pictures for public display. For example, if the Duke of Rutland had been told, you will have to pay death duties at 40% but can gradually reduce the bill over a number of years by lending your pictures to a public Gallery, he would doubtless have done so. And so would many others.
