Capital Gains & Inheritance Tax for Art Collectors in 2025
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The UK’s recent budget announcement has introduced changes likely to impact art collectors - especially those planning to pass down collections across generations. To help unpack these changes, we sat down with Alice Martin, Partner at Charles Russell Speechlys, who specialises in tax advice and estate planning for high-net-worth international families.
From Capital Gains Tax (CGT) adjustments to modifications in inheritance tax, these changes are making waves. Here’s what you, as an art collector, need to know about the new tax landscape and how it may affect your art portfolio.
Inheritance Tax (IHT) Changes: The Larger Concern for Collectors
For art collectors, particularly those looking to pass on their collections, the impact of IHT may be the biggest consideration. Alice explains,
“Inheritance tax remains one of the UK’s least popular taxes, especially for international families used to much lower or even zero inheritance tax rates.” From 6 April 2025, any individual who has been a UK resident for 10 out of the last 20 tax years is treated as a ‘long‑term resident’, making their worldwide estate fully subject to UK IHT at 40%. Moreover, a ten‑year IHT “tail” applies if such a person leaves the UK, meaning that worldwide IHT can continue to apply for up to a decade after departure. These changes mirror the move from domicile‑based to residence‑based IHT and have prompted many high‑net‑worth collectors to rethink their UK base.
"For international families, particularly those unfamiliar with the UK's inheritance tax landscape, this new policy can be a major shock," Alice remarks. "Many families are now seeking ways to preserve collections without a heavy tax burden.”
In addition, the Autumn 2024 Budget capped Business Property Relief (BPR) on qualifying trading assets - including art‑dealer businesses - so that only the first £1 million of such assets enjoys 100% relief; amounts above that attract only 50% relief (effectively a 20% IHT rate beyond £1 million). Collectors whose galleries or studios exceed this threshold will now face IHT on surplus values that were previously fully exempt.
Collectors with nationally important works can still access Conditional Exemption (indefinite CGT and IHT deferral if the piece remains on public display) and the Acceptance‑in‑Lieu scheme (settling IHT at a 25% uplift on agreed valuation when donating to a public institution). Given the higher tax exposures, advisors anticipate increased use of these heritage reliefs to shelter collections.
Capital Gains Tax (CGT): Changes and Implications
The 2024 Budget raised the headline CGT rate to 24%. Alice notes,
“pitching CGT at 24% was likely a strategic decision to avoid discouraging transactions that might stimulate revenue.”
From 30 October 2024 onward, disposals of art by individuals are taxed at 18% (for gains within the basic‑rate band) and 24% (for gains above it), with trustees and personal representatives paying 24%. The annual exempt amount has been halved to £3,000 from April 2024 and remains at that level for 2025/26. As gifting counts as a disposal at market value, intra‑family transfers now routinely trigger CGT based on the full gain.Special personal chattel rules persist: sales yielding £6,000 or less are exempt, partial relief applies for proceeds between £6,000 and £15,000, and full gains apply above £15,000.
CGT applies not only to sales but also to the gifting of assets, which could complicate legacy planning for families with valuable art collections. For example, families who want to pass down artworks as part of their legacy will now need to account for these added costs. This is particularly relevant to collectors in the blue-chip prints market, where liquidity and the frequency of transactions mean that many collectors may encounter CGT on a more regular basis.
The New “Four-Year” Regime for Non-Doms
For many years, the remittance basis provided significant tax advantages for international families living in the UK. However, from April 2025, the Foreign Income and Gains (FIG) regime applies: non‑UK‑domiciled individuals can bring overseas income and gains tax‑free for only their first four UK tax years. Thereafter, worldwide income and gains are taxed on the arising basis. The concept of “deemed domicile” has been replaced by a straightforward 10‑year residence test for IHT. According to Alice,
“The new four-year regime is part of the government’s effort to attract international capital, but the limited duration may not be enough to retain families looking for long-term residency…once an individual surpasses ten years of UK residency, worldwide inheritance tax applies, creating a deterrent for families considering a longer-term stay.”
Under this regime, after four years, income and gains become taxable on a worldwide basis. Alice notes that families may find themselves reassessing their residency plans as they approach this threshold. The risk of incurring UK inheritance tax (IHT) on global assets after ten years may encourage international families to reconsider remaining in the UK, especially as other countries offer more favourable long-term options.
Estate Planning Strategies for Art Collectors
While the tax landscape has grown more complex, Alice suggests several estate planning strategies that could help families preserve their collections. One such tactic is transitional “rebasing” of non-UK assets, where qualifying individuals can limit CGT to gains accrued only from 2017 onward, rather than on the full gain since acquisition. This rebasing only applies to non-UK assets and to individuals who fit specific criteria, but for those who qualify, it could reduce CGT significantly - an especially valuable tactic now that CGT rates are 24%.
Another key strategy involves placing art collections in trusts. Far from a one‑size‑fits‑all solution, trusts allow families to spread both CGT and Inheritance Tax liabilities across multiple beneficiaries and generations. Involving younger family members and professional art advisors in trust governance not only meets HMRC’s scrutiny criteria but also helps cultivate the next generation’s stewardship of the collection. As Alice Martin observes,
“Trust structures can be an effective means to preserve collections across generations,” Although she cautions that the process can be complex; “Simply placing art in trust isn’t always tax-effective; it’s crucial to adhere to specific guidelines, especially for collections held in the UK.”
For those inheriting assets, Alice notes the continued use of deeds of variation as an efficient tax strategy. "A deed of variation allows heirs to redirect inherited assets to the next generation without incurring immediate tax charges,” she explains. This option is particularly useful if a collector inherits a piece they plan to pass on; it can effectively prevent inheritance tax from being applied twice to the same asset.
The Changing Art Market Landscape
For collectors in the UK, the implications of these changes go beyond just tax costs. The structure of the four-year regime, combined with the ten-year IHT window, may shape where and how collectors invest in and hold art.
“For many families who play a key role in the art market ecosystem, these changes are causing them to look at other jurisdictions,” Alice explains. “It’s increasingly common for clients to consider places like Switzerland and Italy, which offer favourable long-term residency arrangements.”
The UK’s four-year regime and other new rules might impact the property and art markets as a whole, especially if families choose to relocate. Alice’s clients are watching tax policies carefully to determine how best to structure their assets. Alice observes,
“For collectors who might have previously bought art in London, the new rules could prompt a reassessment, especially if they’re weighing the implications of keeping assets in the UK over the long term.”
Future Considerations for Art Collectors
Looking ahead, further IHT reform remains a possibility beyond the 2026 BPR changes. In this unforgiving tax climate, specialist advice is essential. For families with valuable collections, proactive planning with estate and tax advisors will be essential under the new rules. Collectors should evaluate whether holding and passing down collections in the UK remains feasible under the evolving tax regime. As Alice advises, “art is often a personal legacy as much as a financial asset; families should seek advice to ensure they’re preserving both.”
The new tax landscape is complex, and having tailored guidance will help families manage their collections without unnecessary tax burdens.
These changes highlight the importance of estate planning for art collectors. For many families, the choice of location and the structure of asset holdings will be crucial in navigating the next chapter of art ownership in the UK. Alice encourages collectors to explore all available legal and financial tools, whether through trust structures, deeds of variation, or even considering other residency options, to ensure that their collections can be cherished and passed down as intended.
The tax landscape is challenging for art collectors, particularly those with multi-generational succession plans. Although there are strategic ways to mitigate tax impacts, such as using trusts, deeds of variation, and transitional rebasing, these approaches require specialised guidance. For collectors, proactive planning with expert advisors will be essential to navigating this new chapter successfully.
What is mentioned within the podcast recording and this write-up does not constitute tax or legal advice.
