The Treasury is considering giving a new tax break to people who give important works of art to institutions including museums and galleries, it announced yesterday.
It has launched a consultation on the proposals for a scheme it says would encourage lifetime giving of pre-eminent objects, or collections of objects, to the nation.
According to the consultation document, the government is considering giving donors relief from income tax, capital gains tax and possibly corporation tax for the year in which the art donation is made.
The document says that "donors will receive a reduction in their tax liability based on a set percentage of the value of the object they are donating.
"Museums, galleries, archives, etc – many of which are charities – will be interested in the new scheme as it will open a new route for them to borrow pre-eminent objects on long-term loan."
The paper also points out the potential positive and negative consequences for charities that are not museums or galleries.
"There may also be an impact on third sector bodies as people may decide to use this scheme and choose to donate objects to the nation rather than directly to charity," says the consultation document.
It says the scheme will share an annual limit with the existing inheritance tax 'acceptance in lieu' scheme, which allows people to offer items of cultural and historical importance to the state in full or part payment of their inheritance tax, capital transfer tax or estate duty. The limit is set at £20m a year.
Areas of the policy that still need to be developed include how to define "pre-eminent", which institutions would be eligible to receive objects, how the tax reduction should be calculated and whether there should be a cap for the maximum amount of tax reduction available per object.
Justine Greening, economic secretary to the Treasury, said: "We want to make it easier for people to give in a range of ways and at different stages in their life."
The consultation will close on 21 September and responses should be sent to email@example.com.