Conservation and preservation of national heritage objects for public benefit is a longstanding policy of successive governments. However, cultural objects and treasures can present owners and their successors with a dilemma – to retain, but at what cost – or instead to realise the value of the object, and how best this can be achieved.

The recent sale of one of the five long-lost Lewis chessmen following the death of its owner shows that a £5 purchase of an antique chess piece can result in the acquisition of an artefact of serious social and cultural significance, unknown to the purchaser at the time. The chessman in question sold for £735,000.

There are a number of options which can be considered in relation to the disposal of pre-eminent objects of national importance, and as an alternative to sale, tax incentives are available to facilitate the transfer of these culturally important items into public ownership, for the benefit of communities across the country.

The Cultural Gifts Scheme and Acceptance in Lieu

Arts Council England has recently published its 2018/19 annual report on the Cultural Gifts Scheme (CGS) and Acceptance in Lieu (AIL), under which objects to the value of nearly £60m have passed into public ownership, settling over £33m in tax.

The CGS was introduced in 2013 and is intended to encourage the lifetime gifting of pre-eminent objects. Under the Scheme, objects which are accepted by the specialist reviewing panel entitle the donor to a reduction in their income tax liability and/or capital gains tax liability, equating to 30% of the open-market value of the object, and this credit can be spread over a maximum of five tax years. Corporate donors benefit from a 20% credit but this must be applied in a single tax year.

AIL is a long-standing facility available to settle inheritance tax liabilities through the offer of pre-eminent objects as payment instead of cash. The offer is made to HMRC which seeks advice from the specialist reviewing panel to confirm whether the offer should be accepted, and the object is allocated to a suitable national institution on the advice of the panel. Under AIL, a special price is given by HMRC based on an enhanced market value which includes a proportion of the notional inheritance tax payable on the object. This special price is intended to incentivise the use of the AIL scheme over an open-market sale of the object to fund an inheritance tax liability.


In making an offer under either scheme, the donor’s wishes regarding the allocation of the object to a particular national museum or gallery can be taken into account. The end result is that the recipient museum or gallery enjoys the benefit of securing an important cultural object at no direct cost, which in many cases could have otherwise needed substantial funding or donations to have acquired from the open market.


Although many objects are offered from established historic collections, a very wide range of items has been accepted under the schemes, settling tax liabilities ranging from £1,440 to £7m in 2018/19. Notably, the least valuable object accepted in 2018/19 year was gifted under the CGS by a donor who commented that his gift demonstrated ‘the [CGS] can be accessible to all – including PAYE workers’. While not everyone may have a Lewis chessman, the key factor is the quality of the object, rather than the quantum of the tax credit which might be generated.

The CGS or AIL can be considered as part of a wider tax planning strategy, and are usefully compared against the public or private sale options available. However, it is important to note that HMRC does not ‘give change’ where the credit generated under the CGS or AIL exceeds the tax which is due, so in large cases care should be taken to plan for the optimal use of the tax credit.

Further advice

Arriving at the most appropriate, and tax-efficient, solution in any particular case requires both tax advice and also specialist advice on the pre-eminence of the object. For more information on the schemes, or gifts in general, please contact us on 0131 228 8111 or through the website.