Heritage property IHT conditional exemption for buildings of outstanding interest- opening times

Heritage property IHT conditional exemption for buildings of outstanding interest- opening times

Mon 02 Oct 2017

One of the less well-known and sometimes overlooked tax exemptions is the conditional exemption (CE) from inheritance tax (IHT) and capital gains tax (CGT) for buildings of outstanding historical or architectural interest. For this exemption to apply you don’t have to put the property into a special vehicle such as a trust: it can still be owned personally but so long as the conditions are met, the property will remain exempt from IHT. This is not something to be taken lightly, as a gift of an asset subject to CE is only exempt from IHT if the new owner undertakes to continue to meet the conditions for CE.
The first condition is that the property must be of outstanding historical or architectural interest. This doesn’t necessarily mean it must be a listed building: what is required is that the Department for Culture, Media and Sport (DCMS) must have certified it as such.
Once that condition is met the public must be given reasonable access to the property. Recently updated official guidance sets out the sort of arrangements for access HMRC accept as reasonable in order to obtain conditional exemption from IHT, although this remains a difficult area.
HMRC say “Broadly speaking, public access to [conditionally exempt] objects should be available without a prior appointment on at least a certain number of days each year. Outside this “open access” period viewing can be restricted to occasions where a prior appointment has been made.”
The precise significance of “a certain number” is not made certain which doesn’t help with deciding how much access, e.g. how many days, is enough to be reasonable.
The number of days’ opening has to be agreed with HMRC and:
• access should be open and not only by prior appointment, although pre-booking of guided tours is acceptable and restrictions may be made where necessary for the preservation of the property;
• HMRC expect a minimum of four hours’ opening between 10 am and 5 pm but they may agree different times if appropriate; and
• the days of opening must be publicised and HMRC refer to internet advertising as the preferred method of publication.
There is no minimum number of open days and HMRC’s guidance says that making the property available on Heritage Open Days will usually suffice, so the burden of meeting the public availability needn’t be too onerous.
A similar exemption can also apply to pictures, prints, books, manuscripts, works of art, scientific objects or other things not yielding income which may be displayed in a person’s home or in a public place, e.g. an art gallery or library.

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