Expert Witness Journal Issue 65 February 2026 - Flipbook - Page 75
Heritage reliefs: preserving
heritage, reducing tax
by Iqra Babu, Trainee Solicitor & Rachel Brooks, Partner at Foot Anstey
For many years, Agricultural Property Relief and
Business Property Relief have been the main tools
for reducing Inheritance Tax (IHT) exposure.
However, with recent reforms limiting both reliefs
to a £2.5 million cap, high-value estates may 昀椀nd
these traditional strategies less e昀昀ective. In this
evolving landscape, heritage property reliefs (such
as Acceptance in Lieu and Conditional Exemption)
are emerging as uncapped alternatives worthy of
renewed attention.
Conditional Exemption is a temporary exemption
from IHT. The relief operates by deferring the
IHT that would otherwise fall due on the assets in
question.
Land of exceptional scenic, historic or scienti昀椀c
interest.
•
Buildings whose preservation warrants special
care as a result of its historic or architectural
interest, along with associated land, or objects
with a historical association.
Acceptance in Lieu allows individuals to settle an
IHT liability by transferring objects of signi昀椀cant
cultural, scienti昀椀c, or historic value to the nation.
This can avoid the complication and risk associated
with selling assets in order to fund an IHT liability.
Due to a complex function of the relief and the way
the value of the asset and associated tax credit is
calculated for these purposes, this value is often
higher than the post-IHT value in the estate.
To obtain this relief, an application must be submitted
to the Acceptance in Lieu Panel, which appoints
specialist advisers to assess whether the claim
should be approved. If the application is accepted,
the necessary directions and arrangements are put
in place to transfer the property. Once the transfer
is completed, HMRC draws down the corresponding
tax credit.
This deferment of the liability to tax is conditional
on the below:
•
Providing public access to the asset for a number
of days in the calendar year to be agreed with
HMRC (a minimum of 28), either in the asset’s
current location or in a museum.
EXPERT WITNESS JOURNAL
Taking reasonable steps to preserve the asset.
Acceptance in Lieu
It can apply to a wide range of heritage assets. These
include:
•
•
Claiming
Conditional
Exemption
involves
completing form IHT420 and liaising with HMRC’s
Heritage Team. A professional will typically need to
prepare an inventory of the assets and set out why
they qualify for the exemption, along with details
of how the public will be able to access them. Arts
Council England or Historic England then reviews
the application and assesses the items’ pre-eminence
or historic value, which may include an on-site
inspection.
Conditional Exemption
Objects which are pre-eminent for their national,
scienti昀椀c, historic or artistic signi昀椀cance.
Keeping the item in the UK (except for any
period/purpose approved by HMRC).
IHT becomes payable if the owner fails to meet the
required conditions, sells the asset or disposes of it
by some other means (a gift to children perhaps).
The IHT would also become payable on the owner’s
death. In the case of a gift or inheritance, the new
owner can apply to renew the exemption and the
transfer can also bene昀椀t from a Capital Gains Tax
deferment.
These reliefs are especially relevant to owners of
landed estates, historic houses and their grounds, as
well as collections of signi昀椀cant artworks or objects.
For such estates, heritage reliefs can provide a
valuable route to mitigating IHT while preserving
important assets.
•
•
73
FEBRUARY 2026
