Expert Witness Journal Issue 63 October 2025 - Flipbook - Page 81
Preserve it and save: how
conditional exemption can protect
your heritage... and your wallet
by Charles Richardson - crichardson@kingsleynapley.co.uk
With signi昀椀cant changes to Inheritance Tax (IHT)
reliefs for agricultural and business property due
to take e昀昀ect in approximately seven months,
a昀昀ected individuals are exploring every available
planning strategy to mitigate the impact. For those
who are asset-rich but cash-poor, the prospect of
a 20% IHT charge on death is deeply concerning
and threatens the continuity of long-held family
assets.
•
Eligibility is determined by advisory bodies such
as Historic England, Arts Council England, and
Natural England. Crucially, it is not su昀케cient for an
asset to be merely “heritage” or “unique” - it must be
among the most exceptional of its kind.
The uncomfortable reality is that there is no
universally applicable solution. However, the UK’s
Conditional Exemption regime o昀昀ers a compelling—
albeit limited—opportunity to defer both IHT and
Capital Gains Tax (CGT) in speci昀椀c circumstances.
Applications must be submitted within two years of
the relevant transfer, and successful applicants must
enter into formal undertakings with HMRC.
What is conditional exemption?
Conditional exemption is a relief mechanism under
the Inheritance Tax Act 1984, allowing owners of
qualifying heritage assets to defer IHT and CGT
liabilities upon transfer, provided they agree to
speci昀椀c undertakings. These typically include:
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Examples of qualifying assets
Works of art and objects
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Maintaining the asset in good condition.
Providing public access for a minimum number
of days annually.
Retaining the asset within the UK and
notifying HMRC of any changes.
•
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The relief is conditional - the tax is deferred, not
eliminated. If the undertakings are breached, the
deferred tax becomes immediately payable.
•
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The scope of qualifying assets is broad, but the
eligibility threshold is high. The legislation outlines
three principal categories:
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Works of art and other objects of national
scienti昀椀c, historic, or artistic interest that are
considered pre-eminent.
Land of outstanding scenic, historic, or
scienti昀椀c interest, encompassing botanical,
horticultural, silvicultural, arboricultural,
EXPERT WITNESS JOURNAL
A Turner painting in private ownership,
recognised for its artistic and historical
importance.
17th-century naval maps, valued for their
contribution to national history and scienti昀椀c
understanding.
Rare geological specimens, deemed of national
scienti昀椀c interest by expert bodies.
Land of outstanding interest
What quali昀椀es?
•
agricultural, archaeological, physiographic,
and ecological features, as well as man-made
landscapes.
Buildings of outstanding historic or
architectural interest, including essential
amenity land and historically associated
objects.
Capability Brown-designed gardens on
a private estate, representing landscape
architecture of national signi昀椀cance.
Ancient woodland hosting rare species, with
ecological and botanical value.
Historic battle昀椀eld sites, notable for their
archaeological and historic relevance.
Buildings and associated land
•
79
A Grade I listed Jacobean manor house,
preserved for its architectural and historic
merit.
OCTOBER/NOVEMBER 2025
