Taxation of Chargeable Gains Act 1992 section 258

Works of art etc.

Section 258 provides capital gains tax relief for disposals of heritage assets such as works of art, historic buildings and land of outstanding interest, including full exemption for gifts to the nation and sales to approved bodies, and no gain/no loss treatment for gifts where appropriate preservation undertakings are given.

• Gains on gifts to the nation (under Schedule 14 Finance Act 2012) and on sales by private treaty or gifts to approved national bodies listed in Schedule 3 of the Inheritance Tax Act 1984, or transfers to HMRC in lieu of inheritance tax, are fully exempt from capital gains tax.
• Gifts of qualifying heritage assets (including gifts into settlement) and certain deemed disposals by trustees are treated on a no gain/no loss basis, provided the appropriate undertaking covering maintenance, preservation and public access is given to HMRC.
• If the undertaking is breached in a material respect, or the asset is sold triggering an inheritance tax charge, the owner is treated as having disposed of and reacquired the asset at market value, crystallising any deferred gain — with relief so that CGT payable is deducted in computing the value for inheritance tax purposes where both taxes arise on the same occasion.
• The undertaking lasts until the owner dies or the asset is disposed of, and where a building is involved, associated land and objects may also be caught if the undertaking is breached, unless HMRC direct otherwise because the entity has not been materially affected.