Draft Finance Bill 2026-27: Proposed changes to the Cultural Gifts Scheme

Joint owners of pre-eminent artworks and heritage property will now be able to claim a tax credit under the Cultural Gifts Scheme. Many works of art and cultural objects are owned jointly by couples or family members - often bought together, gifted, or passed down through generations - yet, until now, only sole owners could claim the scheme's tax relief. The recently published draft legislation removes this restriction, extending the relief to joint owners, whatever their relationship.

Recent donations made under the Cultural Gifts Scheme illustrate the range of objects that can be gifted to the nation in exchange for a tax credit. In 2025 alone, items included a Vanessa Bell painting gifted to the Charleston Trust, a maiolica pharmacy jar gifted to the Ashmolean Museum, and a standing desk used by two prime ministers gifted to the National Trust to be displayed at Hughenden Manor (the country house of Prime Minister, Benjamin Disraeli).

The draft Finance Bill 2026-27 looks to introduce changes to the Cultural Gifts Scheme with the policy objective to improve “the flexibility and accessibility of the Cultural Gifts Scheme to further boost donations via the scheme and help bolster the collections of UK galleries and museums". 

Issued on 13 July 2026, the draft legislation will be subject to a final technical consultation, open until 7 September 2026.

The Cultural Gifts Scheme

The Cultural Gifts Scheme provides UK taxpayers with the opportunity to donate “pre-eminent” artworks or heritage objects to qualifying museums and galleries in exchange for a tax credit.

Under the scheme, individual donors will receive a tax credit worth 30% of the value of the donated object, which can be set against their Income Tax or Capital Gains Tax bill (spread over a period of five UK tax years, as agreed with HMRC). Companies that make a donation under the scheme will receive a tax credit worth 20% of the value of the donated object, which can be set against their Corporation Tax bill in the year of the gift. The Cultural Gifts Scheme cannot be claimed by trustees or personal representatives.

Subject to certain exceptions, donations made under the scheme do not trigger a chargeable event for Inheritance Tax or Capital Gains Tax.  

The scheme shares a budget (of approximately £40 million per year) with the Acceptance in Lieu scheme, and the same panel determines whether an object qualifies as “pre-eminent” (namely, if it is of national, scientific, historic, or artistic importance). 

Proposed changes

Under the current legislation, donors must be “legally and beneficially entitled to the property” and the property must not be owned jointly (or in common) with others. 

Subject to any revisions to the drafting, this restriction will be removed, and each owner of a jointly-held object will be able to claim the relief proportionate to their share. Individual donors will be able to specify how they wish for the reduction to be set against their Income Tax and/or Capital Gains Tax liability, with the intention of providing flexibility where co-owners have different tax profiles.

At present, individual donors must confirm with HMRC how they will use the credit over a five-year period. The draft legislation looks to amend this and offer donors one opportunity (within the five-year limit) to amend their remaining tax allocation.

Outcome

The Cultural Gifts Scheme is designed to encourage philanthropy among collectors and enable qualifying museums, galleries, archives, and libraries to receive culturally significant objects at no cost (on acquisition). The incentive to use the scheme may also result in these objects remaining in the UK and available to the public, rather than, for example, being sold to private collectors or overseas.

The technical reforms to the legislation look to improve the flexibility and accessibility of the scheme. By removing the restriction on jointly-owned items, the scheme may attract a wider pool of eligible donors and objects, since many “pre-eminent” works - particularly family heirlooms or art collections built up by families – are held in co-ownership rather than by a single individual. Indeed, even objects held jointly by spouses were previously excluded.

The updates to the legislation reflect the government's agenda to promote philanthropy within the arts, whilst also providing a low-cost way to increase support without direct grant funding.

Subject to approval, the changes will take effect from 6 April 2027.