Following his death in 2014, the estate of British politician, diarist and writer, Tony Benn, has been spared the full force of paying inheritance tax after a substantial amount of his personal effects were donated to the British Museum under the acceptance in lieu scheme.
Under the scheme, important heritage objects and significant works can be transferred into public ownership. In return, inheritance tax contributions are significantly reduced. Whilst this may be crucial in maintaining vital artefacts of cultural significance, others have argued that this system is just another archaic rule allowing and even encouraging the rich and famous to avoid their tax obligations.
Among the 795 boxes of materials included in the donation were a range of his famous smoking pipes, a collection of letters between himself and former prime minister, Baroness Thatcher. The archive also boasts thousands of hours-worth of audio diaries.
It is estimated that the combined value of the donated items exceeds £500,000. As a result, his £210,000 inheritance tax bill was settled.
David Jones, a Conservative MP and former Government minister, said: “Mr Benn should be commended for his prudent tax planning.
“It is just a shame he did not encourage people to do the same sort of thing during his lifetime.
“This is a lesson for John McDonnell – even the most Left-wing of his colleagues saw the purpose of prudent tax planning and I am sure that he will endorse that approach.”
Jacob Rees-Mogg, Conservative MP and a former member of the Treasury select committee, said: “I am absolutely delighted that people use legitimate and legal exemptions to minimise their tax bill.
“It is a helpful reminder that no tax payer has any obligation to pay any more than the law requires and it is admirable that the late Tony Benn took such a principled position towards minimising tax.”
Mark Littlewood, Director General at the Institute of Economic Affairs, said: “This is yet another reminder that inheritance tax is fundamentally out of date.
“The costs of collection are high and it yields little revenue, mainly because the rich and powerful can easily exploit the many loopholes to avoid paying it altogether.
“Opposition to inheritance tax is so strongly-felt and wide-spread that even those who have spent a career railing against tax avoidance measures have judged that, of all taxes, this is the one that can and should be avoided.”
Should schemes like this commend the donor for prudent tax planning? Or, is this just another loophole for the rich and powerful?
