What is defined as treasure? What do you do if you find it on your land? And do you need to pay tax on any rewards that you are given?
Graham Doubtfire, Tax Partner, needed to brush up on some unusual tax legislation when one of his clients found gold coins on their land.
Firstly, let’s look at the official definition of treasure. The term ‘treasure’ is defined by the 1996 Treasure Act as:
1. any object at least 300 years old when found which:
- is not a coin but has metallic content of which at least 10 per cent by weight is precious metal (ie gold or silver);
- when found, is one of at least two coins in the same find which are at least 300 years old at that time and have that percentage of precious metal; or
- when found, is one of at least ten coins in the same find which are at least 300 years old at that time;
2. any object at least 200 years old when found which belongs to a class designated by the Secretary of State. At the time of writing, a prehistoric object (other than a coin) any part of which is of precious metal and prehistoric objects (other than coins) any part of which is of other metal provided there are two or more in the same find have been designated as treasure;
3. any object which would have been treasure trove if found before 24 September 1997. In practice the only recent finds which would have fallen within this category but not within category 1 above have been hoards of gold and silver coins less than 300 years old;
4. any object which, when found, is part of the same find as:
- an object within categories (1), (2) or (3) above, found at the same time or earlier; or
- an object found earlier which would be within categories (1) or (2) above if it had been found at the same time.
So if you dig up historic objects on your land, the first thing to do is to confirm whether they fall within the definition above. You must report all finds of treasure to your local coroner either within 14 days after the day it was discovered or within 14 days after you realised the find might be treasure. Your local Finds Liaison Officer ( www.find.org.uk) can help you in determining whether a find constitutes potential treasure and can report the find to the coroner on your behalf. Failure to report a find of treasure can land you with an unlimited fine, a custodial sentence of up to three months, or both.
Valuing the Find
Once the Finds Liaison Officer or local museum curator has examined the find they will write a report which then goes to the coroner who will hold an inquest. Museums have the opportunity to acquire treasure, and finds are valued by an independent expert committee (the Treasures Valuation Committee). A reward, equal to the full market value of the
treasure will be divided between the finder, the landowner and/or the occupier, unless you made a different agreement. If the find was made as a result of an archaeological dig, the volunteers and archaeologists are not entitled to any reward. If the finder acted in bad faith, for example through trespassing on your land or trying to conceal what they found, they are very unlikely to receive anything.
We Found Gold!
Andrew and Jude Blois who run the Hinton Estate near Southwold really did find a hoard of gold coins on their land in 2018. Andrew commented: “As far as metal detecting goes, I think it is about as exciting as it gets; finding gold! The coins are around 2,000 years old and some of them are the only recorded examples of their type; it is apparently one of the most diverse finds of its type. The coins originate from all over East Anglia; why they ended up in field near Blythburgh I doubt we will ever know.”
Jude adds: “We have an arrangement with a local metal detector who we know to be careful and responsible; he’s also a tennis coach and an electrician, so he’s a man of many talents! He is the only person we allow to detect on our land, and anyone else who wants to search has to work under his supervision. The coins that he found were declared as treasure by the Suffolk Coroner and retained by the Crown. They have now been acquired by Halesworth Museum, and a reward was given which was split between us as the landowners, and the finder of the hoard.”
We have had several other exciting finds on the estate, including Stone Age flints, and a hoard of metal castings from a Bronze Age foundry which is still going through the coroner’s court. But these discoveries are obviously assets, even though we had no idea of their value when they were found. So we got in touch with Scrutton Bland for some advice!”
What are the Tax Implications for Treasure?
Graham Doubtfire, Tax Partner has been dealing with this rather unusual case and explains when tax needs to be paid. “On the basis that the items found are defined as treasure within the definition above, they are subject to tax as follows.
Where the treasure found is retained by the Crown, ex gratia rewards paid have no tax consequences. The rewards are pure gifts of cash and are not chargeable to Capital Gains Tax.
However, where the treasure is not retained by the Crown, the Crown’s title is disclaimed and the treasure is returned, the subsequent disposal of this is subject to Capital Gains Tax (or CGT). The base cost of the treasure for CGT purposes is the market value of the treasure on the date of the gift by the Crown. What this means in most cases is that unless there is a significant time interval between the treasure not being retained and it being sold, we would need to include the proceeds received (and the cost would be the same amount as that would be assumed to be the market value of the treasure on the date of the gift by the Crown).
In the case of the treasure found on the Hinton Estate, the Partnership Tax Return reflected the fact that the income from the reward they were paid by the Crown was non-taxable and this then flowed through to their Personal Tax Returns as a reduced non-taxable Partners Profit Share.
This was a fascinating piece of work, and we very much enjoy being challenged by unusual cases which require a slightly different approach to usual. Our Private Client tax team has an in-depth knowledge of personal tax matters, which enables us to provide specialist assistance to high-net-worth clients, even if you don’t have gold coins buried on your land!”