Offers in Lieu of Inheritance Tax or Other Death Duties
Chattels may be offered in lieu of inheritance tax or other death duties, if they are considered to be of pre-eminent national interest or associated with a building of outstanding historical or architectural interest. The Heritage & Taxation Advisory Service has 40 years experience of assisting in these highly specialized transactions.
It is sometimes possible that an item offered in lieu of tax continues to remain in situ, even though the building is in private ownership, where that building is open to the public.
Cultural Gifts Scheme
This Scheme started in April 2013, so gives a comparatively new opportunity for tax planning. The Scheme seeks to encourage philanthropy by offering donors to certain national institutions a tax credit, typically of 30%, of the value of the work of art they donate.
The tax credit may then be applied against the donor’s income or capital gains tax liabilities, or in the case of a company against a corporation tax liability. The tax credit can be used in the year of donation, or otherwise spread over the following five tax years. The Cultural Gifts Scheme offers a new opportunity for tax planning with works of art and the Heritage & Taxation Advisory Service would be delighted to discuss it with you.
Private Treaty Sales
Exemptions from capital gains tax and inheritance tax in relation to chattels and land are, in reality, a deferral of tax on certain conditions being met throughout the period of tax deferral. Since 1998, these conditions have required greater public access to the exempt items.
Whilst this whole area of taxation has become more complex and even arcane, it remains possible to defer capital taxes if the chattel is either of pre-eminent quality or is historically associated with a building of outstanding architectural or historical interest. Such deferral also extends to buildings and land which are of outstanding architectural, historic, scientific, scenic or amenity interest.
The Heritage & Taxation Advisory Service has extensive experience in advising clients in this area, including the likelihood of exemption being available, the procedures to obtain it and the conditions likely to be attached to it.
Pre-Sale Tax Advice
Post-Sale Tax Valuations
Other Tax Valuations
Lease of Chattels
This can arise under a number of circumstances. Among the most common is where the donor gives away chattels to the donee, but wishes to continue to retain use of them. To achieve a potential inheritance tax saving, it is necessary for the donor to be able to show that he has paid the donee full consideration for the continued use of the chattels. The Heritage & Taxation Advisory Service is able to advise on the terms of the lease and to represent either the lessor or lessee in negotiating the market rent and/or arrangements where the rent is capitalized.
A lease may also be put in place in other circumstances including where the chattels are owned through an offshore structure or charities. Different tax considerations apply here. The Service is able to provide guidance in conjunction with the appropriate specialist departments within Christie's.
Loss of Chattels
A Maintenance Fund (a form of trust) can be established to support land and chattels which meet their respective qualifying criteria. Land and buildings must be of outstanding architectural, historic, scientific, scenic or amenity interest. Chattels must be historically associated with a building of outstanding architectural or historical interest. Such Funds attract concessionary tax treatment in respect of capital arising from the trust assets which are used to support the qualifying chattels or land.
The Heritage & Taxation Advisory Service is able to assist clients and their professional advisers in considering the advantages and conditions attaching to the establishment of such Funds.