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 show HMRC:

• 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).  

HMRC will 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 to HMRC.

Heritage management plans and conditional exemption

A HMP sets out how you will maintain your heritage property and keep your conditional exemption. You may not need a HMP if your heritage property is small and easy to manage.

You will find a HMP useful if your property is large and has several heritage features.

HMRC and its advisory agencies use your HMP when 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 that’s 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:

• what’s 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 property’s 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:

• HMRC has 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 a HMP, or your existing HMP requires completion or review, or an additional specialist survey or study will improve the understanding and management of the land’s outstanding interest
• the project is consistent with Natural England’s purpose
• the proposed HMP, survey or study follows the guidance on preparing HMPs or other relevant guidance, or is agreed with Natural England, including any supplementary advice provided by Natural England
• the proposed HMP, survey or study will be completed or be at consultation draft stage within the grant funding period of the financial year in which it’s 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* registered parks and gardens, including studies, surveys or management plans for these assets

Application process

Natural England writes to owners of eligible land in November each year to invite applications for a HMP grant.

Natural England must receive your completed application by 28 February, or the date they state in their letter.

Natural England will:

• evaluate all applications it receives by the closing date, in accordance with the eligibility and evaluation criteria it provides with the application form
• award funding to eligible applications within its available budget (if the total value of successful grant applications exceeds the budget for the financial year, all successful applicants will be offered the same reduced percentage funding)
• tell you the outcome of your bid

You can write your own HMP if you have the necessary skills, but you will only get funding for work done by specialists or consultants.

Getting help preparing your heritage management plan

The relevant advisory agencies will provide advice to help you or your consultant write a HMP.

Natural England can give you advice on the scope of your proposed project from March to October. They cannot give you advice about your proposal during the grant application window from November to February. They cannot comment on a brief for consultants at any time.

Advisory agencies for land of outstanding scenic, historic or scientific interest

• Natural England
• Scottish Natural Heritage
• Natural Resources Wales
• Northern Ireland Environment Agency

Advisory agencies for buildings of outstanding interest, amenity land and historically associated objects

• Historic England
• Historic Environment Scotland
• Cadw: the Welsh Government’s historic environment service
• Northern Ireland Environment Agency

Getting your heritage management plan approved

You must get comments on your draft HMP from the correct advisory agencies. You must ask the agencies to approve your HMP before you send it to HMRC.

The agencies usually need 6 weeks to comment.

Using other funding with conditional exemption

Your HMP sets out what you need to do to keep your conditional exemption.

It can also say what additional work you would like to do. You will not have to complete these voluntary steps to keep your conditional exemption.

Your HMP could help you apply for government funding to enhance your property.

You cannot apply for government funding to pay for maintenance work that HMRC requires you to do as a condition of exemption.

EligibleCountryside fundingStewardship onand landInheritance conditionallyTax exemptor fromCapital InheritanceGains Tax exemption.

Get more guidance on heritage management plans

HMRC’s guidance on conditional exemption tax has detailed advice on the rules of conditional exemption. You can contact the relevant advisory agencies for further help.

Historic England offers further advice on outstanding buildings, amenity land and historically associated objects.

The guide to drawing up a collections management plan has specific advice about preparing a management plan for historically-associated objects.

Historic Houses and the Country Land and Business Association can give you general advice and useful contacts.