Lord Jeffery Archer, the millionaire author, is reported to have given a sculpture of the devil to the Ashmolean Museum in Oxford, to take advantage of a little known tax break.
Lord Archer will be able to offset 30% of the value of the sculpture against his income tax or capital gains liabilities, under the Cultural Gifts Scheme, which is confusingly called Gifts to the Nation in the tax legislation (FA 2012, Sch 14).
Whatever it’s called, the scheme gives a generous tax break to wealthy donors, who want to give valuable objects to museums or art galleries in the UK. The object must be judged to be of national historic, artistic, or scientific interest, and it can’t be land or buildings. A panel from the Arts Council judge the quality of the object before it is accepted, and they produce an annual report listing the objects which have been approved for acceptance under the scheme each year.
The Cultural Gifts Scheme is similar to the Acceptance in Lieu of inheritance tax scheme, but gifts under the cultural gifts scheme are made while the donor is still alive.
The value of a gift made under the Cultural Gifts Scheme is exempt from CGT and IHT. If the donor is not domiciled in the UK and uses the remittance basis, the transfer of the object into the UK is not counted as a remittance to the UK.