New tax concessions for art donations
July 28 2011
The UK government is currently consulting on a plan to give tax concessions for donating works of art to the nation. At the moment, the only tax break you can get for giving your Rembrandt to a museum is when you're dead, under the Acceptance in Lieu (AIL) scheme.
Now, you will be able to donate the Rembrandt whilst you're alive, and get a tax concession not on your inheritance tax liability, but on your income tax.
You can take part in the consultation here. The government wants views on:
- who will be eligible to apply for the new scheme;
- how to define pre-eminent and how these objects will qualify for the new scheme;
- how acceptance of offers will work;
- which institutions will be eligible to receive objects;
- how objects should be allocated to institutions;
- what conditions should attach to objects allocated to institutions;
- how the tax reduction should be calculated, including the rate of reduction which should apply per donated object; and
- whether there should be a cap on the amount of tax reduction per object or per donor.
This is obviously good news for museums and galleries. The idea was first suggested by Sir Nicholas Goodison, in the 2004 Goddison Review. But Gordon Brown, wary of tax breaks for 'the rich', sat on the scheme and nothing ever happened.
There are, however, two important catches buried in the small print. First, the level of tax available to be written off per year will be shared with the existing AIL scheme. Currently this is £20m (or, for example, less than half of one of the Sutherland Titians). So there will be no 'new' money available. And second, you won't be able to write off the full value of your Rembrandt against tax. Only a certain percentage (yet to be decided) of the value can be written off, unlike the AIL scheme, where you can offset the full value of the picture against any inheritance tax owed. So it may be better to wait until you're dead after all.
