Finance Act 2012 introduced a new scheme effective from 1 April 2012, to encourage taxpayers to donate ‘pre-eminent objects or collections’ to the nation, by giving tax relief at 30 per cent of the agreed value of the object. The donor can choose whether to take the relief against income tax or against capital gains tax or a mixture of both. The relief can be spread over up to five years starting with the year in which the donor’s offer of the object was registered under the scheme. Gifts under the scheme are exempt from capital gains tax and inheritance tax.

The provisions for gifts of pre-eminent objects to the nation by companies give a reduction in a company’s corporation tax liability of 20 per cent of the agreed value of the gift. The reduction will be applied to the company’s corporation tax liability in the year in which the company’s offer of the object was registered under the scheme. The definition of a ‘pre-eminent object’ mirrors the definition used for the purposes of the Inheritance Tax (IHT) Acceptance-in-Lieu scheme (which gives HMRC a discretion to accept certain heritage property in satisfaction of an IHT liability), but includes pictures, books, works of art, scientific object or other objects if the relevant minister is satisfied that it is pre-eminent for its national, scientific, historic or artistic interest.

The donor must be legally and beneficially entitled to the property and not own it jointly with others and the gift must be offered in accordance with a scheme set up by the Secretary of State for Culture, Media and Sport for these purposes, registered in accordance with the scheme, and the offer accepted by the relevant minister,

The cultural gifts scheme was set up by the Department for Culture, Media and Sport and is in many ways similar to the IHT Acceptance-in-Lieu scheme. The total value of tax reductions available under this and the AIL scheme cannot exceed £30 million in any tax year.

Offers to donate under this scheme are made to the appropriate Arts Council, which will make a recommendation to the relevant minister.