Practice · Foundations and legacy · Glossary
Acceptance in lieu
Acceptance in lieu is the United Kingdom scheme that lets a person who owes inheritance tax pay all or part of it with an object, a collection or land. Anyone liable for the tax, or for interest on it, can apply. The Board (HMRC) may accept the property if it thinks fit, and only if the Secretary of State agrees (s. 230(1), Inheritance Tax Act 1984).
Published by ArtisDomus, written by Polina Surina.
So three parties act, in this order: the person liable applies, the Board decides, the Secretary of State agrees. Either of the last two can refuse.
The scheme exists only in United Kingdom law.
What can be offered
Land, objects tied to a building, and pre-eminent things.
- Land
- Any land that the Board and the person liable agree on (s. 230(2)).
- Objects in a building
- Objects that are or have been kept in certain buildings, where the Secretary of State thinks they should stay associated with the building (s. 230(3)). The building may be one the Board has accepted, or decided to accept, for tax or estate duty. It may belong to the Crown, a Duchy or a government department. It may be in the guardianship of the Secretary of State (Ancient Monuments and Archaeological Areas Act 1979) or of the Welsh Ministers (Part 2, Historic Environment (Wales) Act 2023). It may be in the guardianship of the Department of the Environment for Northern Ireland (Historic Monuments and Archaeological Objects (Northern Ireland) Order 1995). Or it may belong to a body listed in Schedule 3.
- Pre-eminent things
- Any picture, print, book, manuscript, work of art, scientific object or other thing that the Secretary of State judges pre-eminent for its national, scientific, historic or artistic interest (s. 230(4)(a)).
- Collections
- Any collection or group of such things that the Secretary of State judges pre-eminent as a whole (s. 230(4)(b)). Items that are ordinary one by one can qualify together.
In judging pre-eminence, any significant link between the object, collection or group and a particular place must be taken into account. National interest includes interest in any part of the United Kingdom (s. 230(5)). Where there is a Scottish interest, the Ministers’ functions can be exercised separately (s. 230(6) and (7)). A Scottish interest exists where the property is in Scotland. It also exists where the person offering it has asked, or made it a condition, that it be shown in Scotland or passed to a body there.
How the price is fixed
The douceur splits the tax saving between the vendor and the buyer.
The value of the tax exemption is shared between the vendor and the purchasing body. This administrative arrangement is called the douceur, and it produces a special price.
- Land and buildings
- The public body gets 90 per cent of the tax saving, or HMRC does where the asset is accepted for inheritance tax due. The transferor gets 10 per cent.
- Other assets
- The public body or HMRC gets 75 per cent, and the transferor 25 per cent.
- The budget
- The scheme shares a budget of £40 million a year with the Cultural Gifts Scheme, counted as tax forgone.
- Who runs it
- Arts Council England runs the panel for acceptance in lieu and conditional exemption for the whole United Kingdom. It took this over when the Museums, Libraries and Archives Council was abolished.
What it settles
It pays the tax and ends a conditional exemption without a charge.
Acceptance pays the tax up to the special price (s. 230(1)). A transfer under section 230 is also not a chargeable event for conditional exemption (s. 32(4)(b)). So an object held under heritage undertakings can leave them this way, and the deferred tax does not fall due.
In practice the money takes the long way round. The inheritance tax must first be paid by other means, and a grant of representation (the legal authority to deal with the estate) obtained. HMRC repays the tax once the property has been transferred.
Acceptance leaves open where the object goes. The person offering it may ask, or make it a condition, that it be shown in Scotland or passed to a body or institution there (s. 230(7)). Section 230 uses that wish to mark a Scottish interest. It does not say the wish binds anyone.
The relief this route ends is explained under conditional exemption.
Sources
- Inheritance Tax Act 1984 (1984 c. 51), s. 230(1)
- Inheritance Tax Act 1984, s. 230(2), (3), (4), (5), (6), (7)
- HMRC, Guidance on capital taxation and the national heritage, last updated 23 August 2024; HMRC Capital Gains Manual, CG73340, updated 6 September 2026
- HMRC, Reforming the Cultural Gift Scheme, published 13 July 2026
- Inheritance Tax Act 1984, s. 32(4)(b)
- GOV.UK, Pay your Inheritance Tax bill: By transferring national heritage property