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The revelation comes from the National Arts Collection Fund, who have been lobbying for such a scheme and submitted a proposal to the Treasury earlier this year.

The Art Fund, as they are also known, see the Living and Giving scheme as a watershed tax break because it affects income tax rather than just capital gains or inheritance taxes, which can already be partially offset against donations.

They have consulted more than 550 key organisations and individuals on the matter and say that the response has been overwhelmingly positive. And they say the Treasury is now “actively considering” such a scheme following Labour’s election manifesto pledge to “explore further ways to encourage philanthropy to boost the quality of public collections”.

The Art Fund have been pursuing the scheme against a backdrop of Heritage Lottery Fund (HLF) cutbacks on acquisitions grants. They say it allocated just £1.6m to acquisitions last year (less than 0.5 per cent of total grants), compared with £10m or more in previous years.

“Income to the National Heritage Memorial Fund (NHMF), the fund for heritage at risk, is 60 per cent below pre-Lottery levels,” said an Art Fund statement. “At the same time, art prices have continued to rise rapidly and museums and galleries are competing with billionaire private collectors.”

If adopted as the Art Fund hope, Living and Giving will follow similar schemes used in other countries for years – most notably in Australia, Canada, the USA and the Republic of Ireland.

In Australia, a wide range of cultural material is donated each year, worth on average around £11m per annum. “It is simple, well protected against abuse and has been extremely successful,” say the Art Fund and has seen more than $300m (£125m) since it started operating in 1978.

A copy of the Art Fund’s proposal for Living and Givingg and its paper on the problem of acquisitions are available online at