Alternative way of paying tax boosts national collections

24 November 2014

What is the connection between these items of cultural heritage?

  • Sculptures by Barbara Hepworth in Edinburgh’s Royal Botanic Gardens
  • Works by Corot and Degas at the National Gallery and the Courtauld Gallery
  • Handwritten lyrics by John Lennon at the British Library
  • Portrait of art critic and poet John Ruskin by John Everett Millais at the Ashmolean Museum in Oxford

Answer – they have all been donated to the UK’s galleries and museums in lieu of paying inheritance or income tax.  Whilst an object sold privately may well disappear from public view, or be taken overseas, the benefit of this scheme is that many interesting and intriguing pieces remain in the public domain for widespread enjoyment.   

The Acceptance in Lieu scheme was initiated in 1910 and allows owners of cultural and historical artefacts to donate them into public ownership and in exchange, receive a reduction in inheritance tax which is equivalent to the full market value of the piece. 

The scheme was employed by Lucien Freud who stated in his will that the Corot and Degas artworks should be donated in lieu of inheritance tax.

This year, the scheme was broadened through the Cultural Gifts Scheme to offer reductions in income tax.  This fund is, however, limited to an annual pool of £30m and recipients receive a reduction in their tax bill equivalent to 30% of the value of the object over a 5 year period. 

The first gift under this new scheme was made in May by Beatles biographer Hunter Davies who donated a collection of John Lennon’s letters and lyrics, including Strawberry Fields Forever, in exchange for an estimated reduction of £319,500 in his tax bill

Both schemes are administered by the Arts Council England who reported that in 2012-2013, 30 collections with a total value of £49.4m were handed over.  The Chair of the Arts Council, Sir Peter Bazalgette said it "brought treasures with an unprecedented commercial value into the national collections".

Culture Minister Ed Vaizey added "The owner of the item accepted gets a discount on their tax bill, a museum or gallery gains an important new acquisition for their collection, and the public get a chance to enjoy it free-of-charge, often for the very first time."

The above is not legal advice; it is intended to provide information of general interest about current legal issues. 

If you require any further information please contact Danny Carter on 01245 228107 or