There are special rules covering 'heritage property' - works of art or important buildings that are of significant cultural importance - where capital taxes are concerned. In appropriate circumstances, the rules allow such property to be used to settle Inheritance Tax (IHT) and Estate Duty liabilities. It is also conditionally exempt from other capital taxes.
For example, a painting of Venice by 18th Century Italian master Guardi was recently accepted in lieu of an IHT liability, and because the painting was worth more than the IHT due, a payment was made to the estate.
The relevant guidance on heritage property is contained in leaflet IR67, which was last updated in 1986. HM Revenue and Customs have announced that this is to be revised and new guidance will be published soon. It is rumoured that this will restrict the available relief on heritage property, which has been abused in some instances.
For further information, see HMRC's website.