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Conditional exemption from Inheritance Tax and Capital Gains Tax

You can apply to HM Revenue & Customs (HMRC) for conditional exemption if you have an Inheritance Tax or Capital Gains Tax charge on:

• land of outstanding scenic, historic or scientific interest
• buildings of outstanding historic or architectural interest

Assessors who deem a building or land as outstanding are likely to consider:

• land of outstanding scenic interest as having qualities that exceed land of its general type (based on national rather than local standards)
• land of scientific interest as having special flora, wildlife, geological or physiological features
• land of historic interest as having special historical interest in national terms, such as being associated with a nationally important historical event or a registered landscape, park, garden or demesne (grade 1 or 2* or outstanding as appropriate)
• a building of outstanding historic or architectural interest that is likely to be a listed building (grade 1 or 2* or A as appropriate) or a scheduled monument

If you have a building of outstanding historic or architectural interest, you can also get conditional exemption for:

• land essential for the protection of the buildings (amenity land)
• objects historically associated with the building

An advisory agency will assess your land or buildings and advise HMRC whether your property is outstanding. The agencies will also advise you and HMRC on what you need to do to maintain and preserve your property and provide reasonable public access.

To get and keep the conditional exemption you will need to showHMRC:

• how you will maintain and preserve the property
• how you will provide reasonable public access

These conditions will usually be set out in a heritage management plan (HMP).

HMRCwill then decide whether to designate your property.

If you do not keep to the terms of the conditional exemption set by HMRC, you may have to pay the Inheritance Tax or Capital Gains Tax charge.

For more information see the HMRC guide to capital taxation and tax-exempt heritage assets.

Maintenance funds

You can transfer assets to a maintenance fund free of Capital Gains or Inheritance Tax to financially support property eligible for conditional exemption. You will need to give an undertaking toHMRC.

Heritage management plans and conditional exemption

AHMPsets out how you will maintain your heritage property and keep your conditional exemption. You may not need aHMPif your heritage property is small and easy to manage.

You will find aHMPuseful if your property is large and has several heritage features.

HMRCand its advisory agencies use yourHMPwhen they check that you are:

• following the conditions for maintaining your heritage property
• giving reasonable public access

What to include in your heritage management plan

You may already have a management plan for some aspects of your property. A HMP thats written specifically for conditional exemption shows how you will:

• maintain and preserve the heritage property in the condition that helped it be granted heritage status
• provide and maintain reasonable public access

Your HMP needs to include:

• whats significant about the heritage property, such as historic buildings, archaeology, designed landscapes and the wider historic environment
• how the public will access it
• how you will maintain and preserve the heritage property
• when you will be able to carry out the work set out in your plan

Your HMP should cover short-term (1 to 5 year), medium-term (10 year) and long-term (25 year) plans on how you will maintain the heritage property.

For medium and long-term plans you need to outline how you will schedule repair and other works to maintain and preserve the heritage property. This is in addition to regular maintenance work.

You do not need to preserve the heritage property as a museum piece, but any maintenance does need to protect its heritage significance. You must think carefully about any proposals for sudden or fundamental changes such as:

• changes in land use, including new development and demolitions
• changes in vegetation cover and management
• conservation techniques
• repair materials

For land of outstanding scenic, historic and scientific interest and buildings of outstanding historic or architectural interest, you should include:

• a map of at least 1:10,000 scale showing your propertys boundaries and access
• a survey that will act as a benchmark from when exemption is granted
• any management priorities and potential issues, including anything that needs early attention
• a general summary of the property, covering its history and significant features essential for the conditional exemption
• your works programmes and how you will monitor progress
• how any tenants fit into the plan
• new and existing access for the public and how you will manage it
• how you will:
  • consult others on changes to the heritage property
  • review the heritage management plan
  • let agencies inspect the site
  • maintain these features and your general approach to management

You should also include:

• for land of outstanding scenic, historic or scientific interest, how you will maintain the land and preserve its character
• for buildings of outstanding historic or architectural interest, how you will maintain, repair and preserve the buildings, amenity land and historically associated objects

The guides on conditional exemption and heritage management plans have guidance on how to prepare for conditional exemption and an example of a heritage management plan.

Cost of preparing a heritage management plan

Preparing a HMP can cost between 6,000 and 16,000. It depends how large or complex your estate is. It can cost less than 6,000 for a small or simple property.

Natural England heritage management plan grants

Natural England offers up to 50% grant funding towards the eligible cost of preparing a HMP for land of outstanding scenic, historic or scientific interest, in England. You must cover the remaining costs yourself.

The grant funding period is from 1 April to 31 March each year, subject to budget availability.

You are eligible to apply for a grant if all of the following apply:

• HMRChas designated the land as being of outstanding scenic, historic or scientific interest in England or Natural England has recommended it for designation
• you do not have aHMP, or your existingHMPrequires completion or review, or an additional specialist survey or study will improve the understanding and management of the lands outstanding interest
• the project is consistent with Natural Englands purpose
• the proposedHMP, survey or study follows theguidance on preparing HMPs or other relevant guidance, or is agreed with Natural England, including any supplementary advice provided by Natural England
• the proposedHMP, survey or study will be completed or be at consultation draft stage within the grant funding period of the financial year in which its awarded

You cannot apply for a HMP grant for:

• capital works
• revenue or annual works
• detailed design proposals or supporting information for planning applications or commercial development
• scheduled monuments, grade 1 or 2* listed buildings or grade 1 or 2*
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