The risk of taxing our built heritage out of existence is all too real

Unglamorously, this Easter weekend exactly coincides with the start of the new tax year. In the sphere of inheritance tax, this brings with it some of the most important changes to the system since the early 1990s. As first announced, the Government’s proposals to cap business and agricultural relief caused huge controversy, but the protests led by farmers won public support and secured important concessions.

The relative success of the farmers, however, has taken the wind out of the sails of another campaigning group that, in many respects, had common cause with them: country-house owners. Their plight will not elicit much political sympathy, particularly in the present state of the world.

In Athena’s view, however, a government with long-term vision would be foolish not to give serious consideration to their situation. Those who maintain country houses are necessarily asset rich and that reasonably makes them an object of high taxation. What they possess, however, often has an additional intrinsic value as heritage and it’s this that the tax system needs to acknowledge more fully.

Expressed simply, a historic house, landscape and a collection are all worth money, but their heritage value is intrinsic and lies in the interconnection of these elements. Break that connection and, individually, they lose much of what makes them important. There is some recognition of this reality through conditional exemption, which offers private owners of important objects, property or land, tax relief in return for reasonable public access.

What’s troubling, however, is that wider financial pressures may increasingly render this scheme redundant if the estates themselves can’t survive. Anecdotally, there are country-house owners who have been hastily redistributing property between family members to avoid the impending tax changes. Others wonder about the purpose of running a property when there is no prospect of passing it on as a viable economic concern. After all, many country-house estates are effectively small family businesses and have accordingly suffered the same sharply rising costs and increased legislative burdens as their peers.

In addition, however, they also face the constraints and costs imposed by operating in historic buildings and landscapes. It’s a situation outlined in a recent report produced by Historic Houses, A Fragile Inheritance. As one owner expressed it to Athena, the income from running their estate and property has remained largely unchanged over the past decade, but the costs have increased by nearly one-third. Country-house owners should not enjoy preferential treatment in their tax affairs, but Athena would argue that they should be taxed — like farmers — in a way that reflects their particular and unusual circumstances. Public access to the heritage they help preserve is a valuable return and a thoughtfully developed tax system could facilitate it.

As things stand, however, the new tax year promises to usher in not, perhaps, a dramatic change, but a slow financial suffocation of some estates. Do we really want that?