Inheritance tax becomes largest source of art for the nation

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Major artworks by Picasso, J M W Turner and Barbara Hepworth are among more than £25m worth of paintings, sculptures, manuscripts, porcelain and other artefacts donated to the nation over the past year in lieu of inheritance tax.

The scheme is now the single most important method by which the nation acquires works of art. The total of £25.2m is larger than the combined purchase grants of all the museums, galleries and libraries in the UK.

The range and quality of the donations will be used by its supporters to highlight the effectiveness of the scheme, which has been running since 1947, particularly because many of the acquisitions might otherwise have left the country after being sold by their owners at auction.

Other items acquired in 2005-06 include works by Kandinsky, the Bloomsbury artist Roger Fry, a Renaissance masterpiece by Palma Vecchio, a painting by the limerick writer Edward Lear, a Stradivarius violin and a collection of Chinese art. Most of the donors prefer to remain anonymous.

Mark Wood, chairman of the Museums and Libraries Association, which manages the Acceptance in Lieu scheme on behalf of the Treasury, said yesterday: "The AIL scheme is the most important of its kind in the UK and its significance and contribution to maintaining the world-class position of the UK's museums, archives and libraries can't be overestimated in the context of a serious lack of alternative funding for acquisitions.''

He said it was important for the Treasury and the Department for Culture, Media and Sport to continue to develop the scheme to encourage more acquisitions.

All the objects donated are now on display in public collections, although in practice it has not been necessary physically to move the items, since they were already on long-term loan.

The scheme has been criticised in the past for the practice of "conditional exemption", whereby tax is deferred indefinitely and the artworks remain in the owners' possession, but on the condition that they remain on public view. The arrangement ends when the owner decides to pay the tax - either by donating the artwork or selling it.

In the past, this has been attacked because the public were often unaware that the objects were available for viewing in what were essentially private houses or access was restricted in some fashion. Separately, a large number of donated works are allowed to remain "in situ", usually in National Trust properties or private country houses, such as Longleat, which are open to the public most of the time.

Martin Bailey, a writer with The Art Newspaper, said the "conditional exemption" clause was now much less of a problem than in the past. He said: "It did create all sorts of difficulties, but the Government have made efforts to ensure much greater access. You can now go on to the MLA website and look for these works. And there is usually no problem about public access to the in-situ works.''

But he added: "What is galling is that this is now the single most important source of funding for public acquisition of art. It is a sorry comment on the lack of money being made available by the Government."

Top five acquisitions

* Three watercolours by J M W Turner: The Roman Forum, Lake Lucerne and Orfordness. Donated to Whitworth Art Gallery, Manchester.

* Meissen ware owned by family of a Jewish collector shot by Nazis in 1933. Now in V&A.

* Two miniatures by Nicholas Hilliard, of Francis Bacon and the Earl of Essex. Now in the National Portrait and Scottish National Portrait galleries.

* One of only 15 copies of a print of The Weeping Woman by Picasso, a companion work to Guernica. Donated to Scottish National Gallery of Modern Art.

* Two wooden sculptures by Barbara Hepworth, part of the trio known as the "Unknown Political Prisoner" from 1952. Now in St Ives, Cornwall.