Gift to the nation
I saw an article in the news this week and it got me thinking about making gifts generally and how important it is that items of national heritage are available for the public to enjoy where possible. It is worth pointing out that in order for no Inheritance Tax to be paid on the value of the paintings (known as the 'acceptance in lieu scheme') the Churchill family will need to satisfy HMRC that the paintings are' pre-eminent' for their national, historic or artistic interest. If the paintings are valued at more than the Inheritance Tax bill no change will be given. Instead what often happens is that museums or other institutions may offer to pay the difference if the paintings are allocated to their institution.
It is possible for Inheritance Tax to be deferred on assets such as this. If the asset in question satisfies the pre-eminent test and the new beneficial owners of the paintings make certain undertakings to HMRC that they will keep the assets in the UK, preserve them and secure reasonable access to the public (which cannot be solely by prior appointment and must be for at least 100 days a year) the tax may be deferred.
I am so glad to see that we have rules that encourage those who are fortunate enough to possess national treasures to use or display these for the benefit of the wider community, and for favourable Inheritance Tax treatment to be given where this happens. Such assets really do form a large part of the culture in the UK and I am pleased to read that these options have been successful in retaining lots of heritage property for the benefit of the general public. It got me wondering just how many items are in museums because of these schemes - and how many other assets would otherwise never be seen by anyone other than the owner's immediate family!
Our Head of Private Client, Rachel Brooks, has written an article about the need to ensure valuable assets such as these are passed down to the next generation in the most tax efficient manner.