Glossary · UK
What is Conditional Exemption (Heritage Assets)?
An Inheritance Tax and Capital Gains Tax exemption for outstanding heritage assets -- such as historic land, buildings, art or archives -- in exchange for public access and preservation undertakings.
Full Definition
Conditional exemption defers Inheritance Tax (and can also defer Capital Gains Tax) on land, buildings, works of art, and other objects of national, scientific, historic or artistic interest, on a transfer on death or during lifetime, provided the owner enters into a formal undertaking with HMRC to maintain, preserve and, in most cases, provide reasonable public access to the asset. HMRC's Capital Taxes Heritage team assesses claims against published criteria (broadly assessing 'pre-eminence' or outstanding interest), and any conditionally exempt asset that is later sold, or where the undertakings are breached, triggers a chargeable event bringing the deferred tax back into charge, based on the value and tax rules at that later date. It is most commonly used for historic houses, estates and significant art or archive collections passing down within a family, where the owners are willing to accept public access obligations (such as open days) in exchange for keeping the asset intact rather than having to sell it to fund an Inheritance Tax bill.