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Art donors are set to receive significant lifetime tax
savings as part of a new Government scheme.
A new scheme introduced in April 2012 will allow donors of
pre-eminent works of art to offer them to the nation at a
self-assessed value. In return the donor will receive a tax
reduction as a fixed percentage (30%) of the object's agreed
value, which can be offset against the income tax and CGT payable
under the self-assessment tax rules. The gift will be free from
IHT.
Companies can also donate artwork, although the fixed percentage
corporation tax reduction is slightly lower at 20%. The scheme is
not available to trustees.
Applying the tax benefit
Donors can apply the tax reduction against their tax liability
in the year the gift is registered or any of the succeeding four
tax years. There is also the option to spread the tax benefit
across the five years in varying amounts, should the donor
wish.
Defining 'pre-eminent'
Objects or collections may be defined as pre-eminent if they
have an especially close association with our history and national
life; are of special artistic or art historical interest; are of
special importance for the study of a particular form of art,
learning or history; or have an especially close association with a
particular historic setting.
The existing Acceptance in Lieu (AIL) panel of experts will
assess and value the gifts in the first instance. Once values have
been agreed the panel will decide where to locate the objects. They
will be loaned to an appropriate establishment in the UK, which is
open to the public. It will be the responsibility of the
establishment to ensure that the object remains in good condition
and is fully protected.
Annual fund
The annual fund for both the AIL and pre-eminent objects regimes
is £30m in total, an increase of £10m on last
year's budget. Offers of donation will be accepted on a
first-come, first-served basis from the start of the tax year. So,
interested taxpayers should plan to make an application as soon as
possible to maximise their chances of acceptance.
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