For hundreds of years, the French baroque artist Nicolas Poussin’s Eucharist has been lauded for its exquisite use of light and shadow.

The painting, dating from 1637-40, was described as “one of the greatest of the Last Supper” by the National Gallery in London, which acquired it in March last year.

The gallery’s many visitors — 3.2 million last year — can now see it without charge thanks to an unlikely benefactor: HM Revenue & Customs (HMRC).

Under a little-known scheme, the painting was permanently handed to the National Gallery last year in lieu of a £6.5 million inheritance tax bill — one of 33 paintings that ended up at the gallery for a similar reason.

The scheme, known as acceptance in lieu, covers not only art, but other items of cultural significance, such as scientific objects, books and manuscripts.

Tax experts predict that more families will soon try to use the scheme as they are dragged into the inheritance tax net. A deep freeze on tax-free allowances combined with a property price boom and rampant inflation means that 1 in 10 deaths are expected to trigger a death duty bill by the end of the decade.

Eucharist, part of a series of seven works by Poussin representing the Catholic sacraments, is worth up to £18 million. It was painted in Rome when Poussin, alongside the scholar Cassiano dal Pozzo, his friend and patron, was studying Leonardo da Vinci’s chiaroscuro principles of light and shadow. The tax bill the painting wiped out was owed by a trust set up by the Dukedom of Rutland, which had owned the painting since 1784.

Per Rumberg, a curator at the gallery, said: “Despite the fact that we already have a great number of pictures by Poussin, this was always a desideratum because it’s a very famous, very important group of pictures. And even in the set this one is quite unique.

“They were pictures that we were really, really interested in acquiring in the past, but they weren’t up for sale. And so it was very fortuitous that at least one of them has now ended up here.”

The bigger picture

Inheritance tax, often described as the most hated tax, is in the headlines again amid reports that the chancellor, Rachel Reeves, is considering tightening up the rules on how much of your estate you can give away tax-free. As it stands, you can give away as much as you like, including property, without the recipients later being liable for a tax bill — as long as you live for at least seven years after making the gift.

HMRC collected £7.5 billion in inheritance tax in the 2023-24 financial year and that is expected to grow to £14.3 billion by 2029-30, according to the fiscal watchdog the Office for Budget Responsibility. This is down to inflation, the fact that inheritance tax-free allowances have been frozen since 2009 and the government’s plan to tax bequeathed pension pots from April 2027.

Anything left to a spouse or civil partner is free of inheritance tax.

The tax can, however, take credit for the fact that thousands of works of art, historical artefacts and scientific objects have been put on public display since 1910 — all while helping families to cut their tax bills.

“Acceptance in lieu should really be better known because what it’s achieved has been extraordinary,” said Sarah Posey from Arts Council England, which now runs the scheme along with HMRC and is part of the Department for Culture, Media and Sport. “It’s a people’s collection of sorts.”

How it works

Acceptance in lieu allows those who own “pre-eminent” cultural objects or properties to apply to HMRC to use them to settle inheritance tax bills at a 25 per cent discount.

Normally up to £325,000 of your estate can be passed on without your beneficiaries paying any tax. This can rise to £500,000 if you leave your main home to a direct descendant on an estate worth less than £2 million. Couples can inherit one another’s allowances, meaning they can pass on £1 million between them. Any assets above those thresholds are usually taxed at 40 per cent.

An estate that had used up all its allowances and had an artwork worth £1 million would normally pay £400,000 in tax on that asset. If the art was accepted in lieu, however, the estate would get a tax credit for its post-tax value (£600,000) plus 25 per cent of the £400,000 tax payable (£100,000). So they would have a £700,000 credit to be used against any inheritance tax owed on the rest of the estate.

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These objects or properties are given to art galleries, museums, or charities such as the National Trust to be publicly displayed. Some estates may ask for something to go to a specific institution, but the allocation is ultimately decided by Arts Council England.

“On one hand it’s an efficient way of settling inheritance tax, rather than purely making a donation. But by using this people are also considering the public benefit and that it can leave a powerful legacy,” Posey said. “So I would like to think that there’s a noble sense that goes along with the financial incentives.”

Before 1953 the scheme was limited to land and property, then works of art associated with specific buildings were included, and finally in the 1973 finance act it was expanded to “any picture, print, book, manuscript, scientific object or other thing which the Treasury is satisfied is pre-eminent for its national, scientific or historic interest”.

Posey said: “There’s a misconception that this scheme relates only to high-value items or to fine art, but it’s much more diverse than that. And it’s not just for the very wealthy. We would like many more people to consider it.”

Between April 2012 and March 2024, according to Arts Council England, 485 cases involving objects worth £577 million were used to settle £351.8 million owed in tax under acceptance in lieu and cultural gifts — a similar, lesser-used scheme which allows taxpayers and companies to reduce income, capital gains and corporation tax bills.

Items accepted in the past ten years to pay off inheritance tax include a 14th-century alabaster sculpture of the murder of Thomas Becket, drawings and notebooks from the children’s author Judith Kerr, and the archive and office of Stephen Hawking (which wiped out tax of £4.2 million).

An elegant solution

Chris Etherington from the accountancy firm RSM said: “With more estates exposed to inheritance tax, more families are exploring the lesser-known options available to them.

“Acceptance in lieu may be niche but it represents an elegant solution to reducing an inheritance tax bill where applicable, and it’s one that both we and our contacts at auction houses are hearing more people are becoming interested in using.”

The scheme has attracted more interest since the budget in October, when the government announced that inheritance tax reliefs for business and agricultural property would be cut from April 2026.

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Pierre Valentin from the London law firm Fieldfisher said: “The budget introduced a 20 per cent inheritance tax charge on business assets over £1 million, meaning that artists’ families who could previously have classified unsold artworks as business assets and avoided inheritance tax altogether are suddenly facing substantially larger tax bills. This shift has made acceptance in lieu not just a useful mechanism but an essential one for artists whose art qualifies.”

Applications made to HMRC are decided by a 14-person panel at Arts Council England, which, with the help of expert advisers spends an average of a year on each case. The criteria are strict. Objects must have special artistic interest or importance, a close association with British history and national life or with a particular historic setting.

Sometimes an object might generate a tax credit larger than the bill due. HMRC cannot give change, so a “hybrid arrangement” is often agreed where the acquiring institution pays the difference.

This happened with the National Gallery’s acquisition of Eucharist, as the painting settled £7.1 million in inheritance tax (suggesting it had a value of £17.8 million), which was more than the £6.5 million owed. The gallery paid the difference of £588,296.

On display

Eucharist, hung in room 29, has joined the ranks of paintings scattered throughout the National Gallery acquired through acceptance in lieu, including works by Constable, Degas, Gainsborough and Rembrandt.

Jean-Baptiste-Camille Corot’s 1870 portrait Italian Woman was in the painter Lucian Freud’s bedroom before it was given to the National Gallery in 2012 in accordance with his will, and in lieu of £1.4 million in tax.

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Paul Cézanne’s 1888 Avenue at Chantilly was acquired in 1990 from the family of Chester Beatty, an American mining magnate who became known as the King of Copper and who amassed a collection of about 40 impressionist paintings.

Yet there is little fanfare. There is no “inheritance tax collection” in the gallery. The only clues to their provenance is a footnote to the label next to these 33 paintings, each of which says “Accepted in lieu of inheritance tax by HM Government”.

“It’s an extraordinary scheme, and not only for us, for institutions all over the country, for smaller collections, which can normally not acquire things. There’s another one, by the way…” Rumberg pointed across the room mid-stride as he led me around the National Gallery.

He was pointing towards a 1777 portrait by Thomas Gainsborough of his daughter Margaret holding a theorbo (a lute-like instrument).

Few are likely to view rising inheritance tax bills as good news. But if they led to greater use of this little-known tax relief, the silver lining is it would not just be the taxman who reaped the rewards, but the millions who visit Britain’s museums, art galleries and stately homes.

As Rumberg said: “There’s hardly a museum in this country that hasn’t benefited from this.”