Here are some of the ways you can help our museums and galleries to acquire new works of art tax-effectively:
Choose Gift Aid
When you buy a National Art Pass, tick the ‘Gift Aid’ box. As a charity, we will then be able to claim a further 25p for every £1 given from the government at no extra cost to you. We will then use this money to help UK museums and galleries to buy great works of art.
Plus, if you pay income tax at the higher rate (40%), you will be able to reclaim the marginal rate yourself, via your tax return.
Give money
Using Gift Aid means that for every £1 you donate to the Art Fund, we can reclaim a further 25 pence from the government at no extra cost to you. For example, if you give £50, the Art Fund receives £62.50
Higher rate taxpayers benefit further by being able to reclaim the higher rate themselves, via their self-assessment tax return.
To increase the value of your gift in this way, please fill in the Gift Aid declaration on the donation form.
Give through your payroll
Did you know that it is quick, easy and tax effective to give to charity through your payroll?
Give As You Earn - the UK’s largest payroll giving scheme – allows you to give directly from your pre-tax salary. This means that you don’t pay any tax on the donations you make and money that would normally go to the taxman goes to charity instead. If you’re a basic rate taxpayer, a gift of £6.41 only actually costs you £5 – so you can pass the tax relief on to the charity.
It is up to you to decide how much you want to give each month. To join Give As You Earn your employer will need to be running a scheme. Fine out more here.
Sell a work of art to a museum tax-effectively (Private Treaty Sale)
If you sell a work of art, you may be liable to Capital Gains Tax (CGT) and/or Inheritance Tax (IHT). However, these charges may be waived if you sell to certain museums and galleries – and there’s a sweetener to encourage you to do it. This is known as a Private Treaty Sale (PTS).
Under a PTS, you agree the sale with one buyer – the museum – rather than putting the work up for sale to the highest offer (such as in an auction). To qualify for tax exemption, works of art or heritage objects must be judged to be ‘pre-eminent’.
The savings made by not paying CGT or IHT are shared between the seller (you) and the buyer (the museum). The benefit of the tax exemption is usually split so that the seller receives 25% of the saving (known as the douceur, or ‘sweetener’), and the museum the remaining 75%.
Private Treaty Sales help public collections to purchase works they might otherwise not be able to afford, while the seller often receives more money than he would have achieved had he sold on the open market, with none of the uncertainty that may involve.
If you are interested in selling a work of art or heritage object to a museum, please contact Gerry McQuillan, Senior Adviser, Acquisitions, Exports, Loans and Collections Unit, Arts Council England, 14 Great Peter Street, London SW1P 3NQ. Email: gerry.mcquillan@artscouncil.uk
Give a work of art to a museum to settle an Inheritance Tax bill (Acceptance in Lieu)
Anyone who is liable for the payment of an inheritance tax bill can offer a work of art or heritage object in part or whole payment of the tax. This is known as Acceptance in Lieu (AIL).
Offers of works of art and heritage objects are assessed by a panel of experts. To qualify, the artwork or object must be judged by the panel to be pre-eminent.
All objects accepted under the scheme are allocated to a museum or gallery to ensure that public access is guaranteed to as many people as possible.
Works of art valued at more than the sum of the inheritance tax bill can still be offered. In this case, the recipient museum or gallery must pay the offeror the difference. This is known as a ‘hybrid arrangement’.
For further information about the AIL scheme, please contact Gerry McQuillan, Senior Adviser, Acquisitions, Exports, Loans and Collections Unit, Arts Council England, 14 Great Peter Street, London SW1P 3NQ. Email: gerry.mcquillan@artscouncil.uk.
