Bigger tax incentives aim to stem flow of British art works to overseas collectors

The struggle to keep valuable works of art in the country was recognised yesterday with the decision to review tax incentives and exemptions to help museums and galleries make acquisitions.

The struggle to keep valuable works of art in the country was recognised yesterday with the decision to review tax incentives and exemptions to help museums and galleries make acquisitions.

The case of the Madonna of the Pinks, by Raphael, which may be exported if the National Gallery cannot find £29.5m to keep it in Britain, has highlighted a problem that museums and galleries have been lobbying over for years.

The art world was delighted with the announcement that the Treasury would investigate whether more tax breaks would make it easier for galleries to buy art, at a time when many have seen acquisitions budgets dwindle. Privately, the Department for Culture, Media and Sport was also pleased.

The Chancellor, Gordon Brown, said: "To back up free entry to the national museums and galleries, which has raised admissions by 70 per cent, I now propose to review the incentives, reliefs and exemptions available to important national and regional museums and galleries to make acquisitions of works of art or culture which should not be lost to the nation."

Although he did not reveal details of the scope of the inquiry, the art world has already suggested improvements.

Last month, the National Art Collections Fund called for greater tax incentives to encourage private giving in Britain, mirroring the climate in the United States. It suggested an extension of Gift Aid to allow donors to set gifts of works of art against tax bills, as is already possible with land and shares. That idea was also promoted earlier this year by Sir John Guinness, the chairman of the Waverley Committee, which advises the Government on which items of heritage should be preserved.

He called for increased incentives to owners of historical collections "to do the decent thing" and offer their collections in the first instance at market rates to museums and galleries.

The Chancellor cannot have missed the pressing need for action. The Portrait of Omai by Sir Joshua Reynolds was saved only after an anonymous donor agreed to give the Tate £12.5m to buy it.

But such generous benefactors are few and far between and most galleries have scant resources of their own to rely on. The British Museum has £100,000 a year for acquisitions while auction room prices have soared.