Preserving culturally significant assets (sometimes gardens) for the nation

  • November 24, 2023
  • By Vanina Wittenburg, Senior Associate

Heritage work, and in particular the preservation of culturally significant assets for the benefit of the nation, is one of the most fascinating aspects of my work as a private client lawyer.

I am fortunate that many of our clients own fantastic private art collections, and that I have close relationships with valuers, art experts, auction houses and heritage professionals, and that the latter are often keen to share stories of the incredible items the gift of which they have negotiated for their clients and the nation.

This aspect of my work has been at the forefront of my mind recently, in particular, because of some exciting item of news which I feel has brought together one of my key interests at work with one of my passions in my personal life, in that I really enjoy art and heritage work, and I am also a great lover of gardens.

The news in April 2023 that Munstead Wood, the former residence of (likely) the best and most well-known English gardener in history, Gertrude Jekyll, with a garden designed by her and a house designed by Sir Edwin Lutyens, has been bought by the National Trust was just fantastic to hear. I have been lucky enough to have had a private tour of Munstead Wood, and it is wholly deserving of being preserved and opened to the public.

Although in the case of Munstead Wood, it appears that a sale agreement was reached between the owners and the National Trust, there are a number of established schemes in place for the gifting of culturally significant assets which are available to taxpayers, and which we often advise our clients on.

The fact that a garden can be preserved as a historically significant asset has started me thinking about the flexibility of the schemes, and the way in which we can help clients access those schemes where it is not so obvious that an item might be significant.

All these schemes require the asset which it is proposed to be donated (which could be property, land or an object) to be ‘pre-eminent’, meaning that it must be of national, scientific, historic or artistic importance, but that should not be taken to mean that it is only paintings or sculptures that can be donated.

In recent years donations through some of the schemes have included textile collections, religious artefacts, jewellery, musical instruments, antique coins, silverware, letter or other archives, fine furniture, clocks, ceramics (including a floor tile!), weaponry, land, as well as Stephen Hawkins’ office, in its entirety. There is clearly huge scope in terms of the types of items that will be accepted, which is good news for clients with unusual collections.

It is worth summarising what the current government schemes are – as follows:

  • The Cultural Gifts Scheme allows pre-eminent objects to be donated to public institutions during an individual’s lifetime (or by a company) in exchange for a reduction in liability to income tax, capital gains tax or corporation tax.
  • The Acceptance in Lieu (AIL) Scheme, by which pre-eminent objects can be offered to a public institution in full or part payment of a liability to inheritance tax on a taxpayer’s death. In addition, the taxpayer’s estate benefits from a reduction in their tax liability of 25% (called the ‘douceur’), meaning that the object is worth 17% more if it is offered under the Scheme than if it was sold on the open market.
  • Conditional Exemption, by which gifts of property (either land or objects) which are deemed important to the UK’s national heritage and which would normally be chargeable (i.e. where the asset is retained in private ownership) can have their inheritance tax liability deferred, provided that certain conditions relating to public access and preservation are met continuously.

It is also worth noting that objects can be left to charity by Will, or gifted to a charity during a taxpayer’s lifetime, without any inheritance tax being incurred thanks to the charitable exemption; but by utilising the Cultural Gifts Scheme or the AIL Scheme, the taxpayer utilises the value of the item to settle the tax due (and in the case of the AIL Scheme, by a further reduction in tax thanks to the douceur), and therefore it is worth pursuing one of these options over a simple charitable gift.

There are therefore a number of options for donating important objects to the nation, either during a taxpayer’s lifetime or on death. To bring me back to my initial excitement of a historically significant garden being preserved for the nation, one of the biggest takeaways from recent conversations I have had with heritage professionals is that pre-eminence can be interpreted extremely widely, as shown by the non-exhaustive list of items which have been accepted to the schemes in recent years. This means that if a taxpayer owns an item which they think has played a role in the nation’s history (no matter how random the item may seem!), there is no reason not to investigate whether it could be donated to the nation.

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