For those lucky enough to own an item of cultural or historical importance (for example a piece of art or collection of books) the issue inevitably arises as to what happens to that item on the owner's death. Given that items of cultural or historical importance are likely to have significant value a key consideration will be the inheritance tax (IHT) liability that the item will attract on death.
One option of course is to sell the item and thus settle the IHT from the proceeds of sale. However, another option is to make use of the Acceptance in Lieu (AIL) scheme. The AIL scheme is designed so as to allow taxpayers to transfer culturally or historically important objects (including land and buildings) into public ownership, allowing the item to be enjoyed by the nation. In return the taxpayer has their IHT liability reduced.
Between 2010 and 2020 the scheme was used a total of 390 times and during that period the value of items accepted under the scheme totalled £423m.
In the last reported year (2019-20) items gifted under the scheme have included:
- an archive of original artwork and printed materials by Barney Bubbles, famous for designing record sleeves, posters, logos, merchandise and stage plans for the British independent music scene in the late 1970s and early 1980s.
- A letter from Sir Winston Churchill to Hugo Baring offering his condolences on the death of his wife, Lady Evelyn Harriet Baring, dated 8 February 1931
- A collection of over 50 Carboniferous fossils from East Kirkton, being somewhere between 300 - 360 million years old.
Now added to that list is the painting by LS Lowry depicting David Lloyd-George’s birthplace.