The government will introduce a tax relief to encourage gifts of "pre-eminent works of art" to the nation, the Treasury announced today.
The new rules will grant up to 25 per cent relief on income tax or capital gains tax to donors who give away major works of art or historical objects to the nation. Companies that donate will be eligible for a reduction in corporation tax.
Documents released in today’s autumn statement said the total value of tax reductions in this scheme, combined with the existing ‘acceptance-in-lieu’ scheme, which allows inheritance tax to be paid using works of art, will be £30m a year, not £20m. The £20m figure was initially proposed in a consultation that was announced in this year’s Budget and ran from June.
Chris Lane, policy officer at the Charity Tax Group, said he welcomed the increased annual limit. "It shows that government has been listening to the concerns of the sector" he said.
Sue Daniels, executive director of the European Association for Philanthropy and Giving, said "That’s really good news. The limit of £20m was going to be too restrictive. Whether the increase by £10m is enough, who knows, but it’s a step in the right direction."
However, Melissa Papadakis, director of tax and heritage at the auctioneers Sotheby’s, said she doubted whether the rise would be enough to encourage donors.
"I don’t think the increase in the overall cap is going to be a major incentive," she said. "There were quite a lot of other issues with the proposed legislation, and it’s more important for these issues to be addressed."
This included the proposed 25 per cent limit on the amount of tax relief available and the proposal that works of art should be donated to the state and then loaned to museums and galleries, rather than being given directly, she said.
"One of the really major issues was that this is in effect a donation to government," said Papadakis.
This could hinder donations, she said, because "people really like giving to particular institutions that they have a local or historical connection to".
More details of the scheme are expected to be announced on 6 December when draft clauses for the Finance Bill 2012 are published.