Historic Houses, which represents 1,650 independent owners of grade I and II* buildings (and their equivalents) across the UK, has published new research on Heritage Maintenance Funds –privately established funds for buildings of national significance open to the public – which shows that if their current 45% tax rate was reduced to 20%, there would be a Net Economic Benefit to the nation of just over £85m.
Ben Cowell, Director General of Historic Houses, explains further: ‘Private owners can establish a Heritage Maintenance Fund (HMF) for a building of national significance that is open to the public. This option has existed since 1976 (the Finance Act of that year). HMFs may in fact be one of the few parts of the statute book explicitly aimed at promoting repair and maintenance of heritage in this way.
‘HMFs are effectively a means by which owners can ringfence income-generating assets (from their own resources) for maintenance. There is an IHT waiver at the point when a fund is established, which helps to encourage them to be set up. However, funds established in this way are liable to the top rate of income tax, 45%. In other words, Funds that are dedicated exclusively to promoting the maintenance of important heritage have nearly half the available income removed automatically each year by the Revenue. This cannot be right.
‘Historic Houses has therefore commissioned an independent team of economists to model what the effect would be of reducing the rate of income tax. It turns out that if the 45% rate was reduced to 20%, there would be a Net Economic Benefit to the nation of just over £85m. This results from the additional maintenance spend, the additional tourism activity arising from houses being open to the public for the first time, and the positive effect on overall wellbeing.
‘Given that most heritage is in private hands, and private owners do not normally benefit from public grants or from the lower rate of VAT on repairs and maintenance, Historic Houses feels strongly that the fiscal framework for incentivising maintenance ought to be improved. The change we are calling for is relatively inexpensive and would demonstrate the government’s commitment to looking after important buildings as well as promoting public access to them.’
