Monday, 4 February 2013

Tax avoidance for all

With David Beckham being lauded for his savvy tax dodging you may be forgiven for thinking that famous footballers have a monopoly on tax avoidance. Not so.

Also reported today is the news that artist Lucian Freud, who died in July 2011, bequeathed artworks by Corot and Degas in his will to the state under the government's 'acceptance in lieu' (AiL) scheme. Under the scheme, people can 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 scheme is said to offer clear tax benefits to owners as items are generally worth 17 percent more if offered in lieu of tax than if sold on the open market at the same price, because tax must be paid on the amount an object is sold for. Once accepted, the works are distributed to museums, galleries and public archival depositories throughout the UK. Thus, in this instance, the Corot works are said to be going to the National Gallery, while the Degas works are to be displayed at The Courtauld Gallery.

So, you don't have to be a famous footballer to get a tax break....being a famous artist is just as good.

More details of the AiL scheme can be found here.

Source: BBC, 4 February 2013

1 comment:

Matthew said...

I have to respectfully disagree that this is tax avoidance.

Most people would say that tax avoidance is when you achieve a better tax result than that which the Government intended (in other words you are doing something contrary to the spirit of the legislation in question).

Here Lucien Freud is doing exactly what the AiL scheme is meant to achieve. The Government wants important pieces of art to be gifted to the State under the scheme, so that they are not sold to private owners.

The generous nature of the scheme is designed to encourage use of it, like all tax incentives. Would you say that saving under an ISA is tax avoidance, because interest and dividends paid to you under your ISA are tax free?

One final point, the scheme is not just available to artists, it is open to anyone who owns an important work of art (although I am not sure that this is what you meant in any event).