Tax benefits for art donors

Donors who give “pre-eminent” objects and works of art to the nation are set to receive a reduction in their tax liability based on a percentage of the value of the object they are donating. A consultation on the details of the new Government scheme to encourage philanthropy is being led by the Treasury to inform decisions such who will be eligible to apply for the new scheme; how to define “pre-eminent”; which institutions will be eligible to receive objects; how objects should be allocated to institutions; the rate of tax reduction which should apply; and whether there should be a cap on the tax reduction to any individual donor. The scheme is designed to complement other proposals announced in this year’s Budget of a reduced rate of inheritance tax where at least 10% of a person’s net estate is left to a charity on their death. The implementation of other philanthropy-related measures announced in the 2011 Budget has also begun. From April 2011 the upper limit on benefits that charities can provide to Gift Aid donors has increased from £500 to £2,500; and under the new Gift Aid Small Donations Scheme being introduced in April 2013, the Government will make charities a Gift Aid-style payment on up to £5,000 of small donations without Gift Aid declarations. The consultation on the donation of works of art runs until 21 September.