Not just a pretty picture: it has its uses too.
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Art is a Tax Efficient Asset


Advice from Director Katie Henry

This month, as the end of the tax year approaches, I wanted to share with you some useful information about art as a tax efficient asset, and why it shouldn’t just be considered as office decoration. 

Case Study 1
In my experience as Director of Art In Offices, I have come across companies such as Innisfree who, as a client, has slowly built a collection of valuable artworks over a number of years.  It started with a small budget, and through the advice of an art consultant, chose artworks wisely, selecting emerging artists with a great reputation, strong exhibition history, and proof of sale prices increasing.  Thus over the years, its collection of inexpensive artworks by relatively unknown artists, has become a very valuable collection of art by mid-career and established artists, which has increased very substantially in value.  So much so that the collection needs it’s own insurance policy.

Here's a useful article about how to account for office artwork within the International Financial Reporting Standards (IFRS) framework. http://www.ifrsbox.com/artwork-ifrs/
Case study 2
Eskmuir Securities
are currently renting three very large artworks by Ken McClymont from Art In Offices for £288 per month.  They hang in the large reception of a new build office building called The Square in Leatherhead.  The art creates an environment which encourages potential tenants to rent the space.  Because the rental is a business expense Eskmuir Securities can also offset the cost against corporation tax (as well as recover the VAT). 
 
Had Eskmuir purchased the artworks, it would be able to charge depreciation against the asset over a reasonable period.  The artwork would be classed in the same category as Plantation, Property and Equipment (PPE) for this purpose.
Case Study 3
Art can create value for money in other ways .  Renting office space (especially in big cities) is expensive, so you need to make sure you’re getting best use from all the space you’re renting.  Two years ago, Marriott Harrison came to me with a problem.  They had a large meeting room, with a small window that looked onto a concrete wall, and no one wanted to use it.  Art In Offices suggested that they needed only two large and colourful artworks, one at either end of the room,  to give the space a personality. 
 
For a subscription of just £200 a month,  Art In Offices changes the two paintings every 6 months, to keep the space fresh and interesting.  Now, hey presto, it’s a much loved space, and Art In Offices art technicians become somewhat of a circus act every time we change the art over.

Proof that Art is Tax Efficient


Reviewing the above case studies of Art In Offices clients, it becomes clear that art is a tax efficient asset because:
  1. Art increases in value every year, even work by emerging artists.
  2. Art becomes a fixed company asset classified as Property, Plant and Equipment (PPE) in line with IAS 16
  3. You can depreciate the art over its useful life, for tax purposes.
  4. Art creates a welcoming and productive environment in the office.
  5. Office space is expensive to rent, and art on the walls encourages all spaces to be used. 
  6. Cheaper artworks like prints can be expensed as office supplies
Importantly, I want to emphasize that companies of any size, with any budget can invest in art.  When I started the company, it was always my aim that Art In Offices provide contemporary art at affordable prices, to companies with any size budget.

Art and the Tax Man

Finally, when accounting for your office art to the tax man, consider these questions:
  • Does your artwork have a determinable useful life?
  • Is your artwork exposed to wear and tear?
  • Does your artwork have some residual value? Can you sell it when you want to?
  • Is your piece of art separable? Or is it attached to the other piece of property, for example – artistic painting on the wall?
  • Does the value of your piece of art tend to increase with time rather than decrease? Does it have some historical or cultural value?
  • Is the value of your artwork material for your financial statements?  
The answer to these questions should prove to any tax man that your office art is a valuable company asset.

Get to Know Art

If you and your team would like to find out more about art, with a senior member of the Art In Offices team as your guide, we recommend you book onto one of the events below.

Click the button to email us any questions about prices, transport, times etc.

Affordable by name, affordable by nature. Many of Art In Offices' partner galleries exhibit here, and we'll introduce you.

Private View: 19th October pm

Open 20th - 23rd October

Book This Event

Frieze - Possibly the best known art fair in London.  Packed to the rafters with contemporary art from the worlds best international galleries.

Private View: 5th October pm

Open 6th - 9th October

Book This Event

A Final Note

Art In Offices Director Katie Henry will be on Maternity Leave from March 1st until 1st May approximately.  During this time she will be accessing emails intermittently.

All questions about our services, events or artworks should be directed to Genevieve@artinoffices.co.uk
Copyright © 2016 Art In Offices, All rights reserved.


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