Art collections and inheritance tax: Laura Neal quoted in The Sunday Times
As HMRC increases its focus on inheritance tax compliance, the article explores the practical steps individuals can take to ensure art collections are properly documented, valued and administered as part of their wider estate planning.
One of the most effective ways to avoid difficulties is to maintain accurate records. As Laura explains:
“One of the best ways to avoid pitfalls is to have an up-to-date inventory of your collection showing where each work is located (including any on loan to institutions), reference to any recent valuations and noting whether each work is insured so your executors know exactly what you own and where it is.”
Valuing artwork for inheritance tax purposes can also present challenges and Laura stressed the need to get expert valuers on board who are used to answering questions from HMRC.
“The valuation exercise can be difficult depending on the type of work and the publicly available data on comparable sales when so much is sold privately.”
The article also explored the inheritance tax implications of gifting artwork during your lifetime. While giving away assets can reduce the value of a taxable estate, careful planning is required. As Laura explains:
“The key with such planning is to avoid the application of the gift with reservation of benefit rules. These are a set of anti-avoidance rules which apply where you give something away but still continue to benefit from it.”
