Arts Council England says it expects a scheme to encourage individuals to donate works of art to the nation to begin by the end of March.
The Cultural Gifts Scheme, announced by the government in the 2011 autumn statement, will allow the giving of pre-eminent objects, or items associated with a historic building, in return for a tax relief.
The donor will benefit from a reduction in their income tax or capital gains tax liability of 30 per cent of the donated object’s value. ACE will be providing the scheme on behalf of the government.
Speaking at a round-table discussion of the scheme at the auctioneer Sotheby’s in London yesterday, Gerry McQuillan, senior adviser in the acquisitions, export, loans and collections unit of ACE, said the tax reduction could be spread over five years.
"I can say with a degree of confidence that it will be open this financial year," he said. "While the gift will be offered to the nation, the donor can express a wish as to which institution it should be allocated to."
To quality for the scheme, pre-eminent objects or collections must have an especially close association with UK history and national life, be of special artistic or historical interest, be of particular importance for the study of some branch of art, learning or history, or have an especially close association with a particular historic setting.
Arts Council England has an annual budget of £30m of relief for the scheme. This budget will be shared with the Acceptance in Lieu Scheme, which allows people to offer items of cultural and historical importance in full or part payment of their inheritance tax, capital transfer tax or estate duty. The Cultural Gifts Scheme will operate on a first-come first-served basis.
McQuillan said he hoped at least one work of art would be donated through the scheme in the short period remaining before the end of this financial year.
The round-table discussion was organised by Philanthropy Impact, a membership body for philanthropists. Wendy Philips, head of tax and heritage at Sotheby’s, told the gathering that she welcomed the scheme, but there were some potential disincentives – these included the restriction on joint property, such as works owned by married couples, the risk that the donor would die before the tax credit was used up, and the perception that Gift Aid for cash, shares and land was more generous.
Charity law specialist Simon Weil, a partner at Bircham Dyson Bell LLP and chair of Philanthropy Impact, told the round table: "I think clients would find it more attractive, purely conceptually, to donate the work to a charity or institution of their choice rather than having to rely on their wishes being acceptable."
McQuillan said donors would be told if their choice of institution was not suitable for the object and be given another opportunity to pick a different location before the gift was finalised.