Treasure Finds: as metal detecting booms, what are the key considerations and tax consequences?
The long and varied history of the UK means its land is rich with lost treasure.
The Portable Antiquities Scheme Annual Report 2021 from the British Museum provides that 1,085 treasure cases were reported in England and Wales in 2021. The most were reported in Norfolk with 85 finds, followed closely by Kent with 74 finds. Significant discoveries included a gold aureus coin of Claudius I dating from AD 41 – 42 found in Portbury in North Somerset. This coin is only the second example of this type found in Britain.
As the boom in metal detecting continues, this is the eighth year in a row that the number of treasure finds has exceeded 1,000. With such an abundance of treasure being unearthed in England and Wales each year by hobbyists armed with ever powerful metal detectors, it is worth considering the legal and tax implications and whether if restrictions apply to a find that means X truly does mark the spot…
What constitutes treasure?
In England and Wales, the Treasure Act 1996 (the “Act”) dictates whether objects are defined as treasure. Currently this is based on material composition. An object is broadly defined as treasure if it is found to be over 300 years old, is made of gold or silver or is found with artefacts made of precious metals.
Following feedback from a recent consultation paper, the Government has announced that the definition of treasure is to be expanded beyond material qualities following concern that items of national importance have been lost to the public or sold into private collections because they are not made of precious metals.
Such an example was a Roman figurine found near Chelmsford in 2014 known as the Birrus Britannicus. This was made from copper alloy and therefore did not meet the legal definition of treasure. The object was due to be sold however fortunately the Government delayed its sale allowing Chelmsford City Museum enough time to raise the required funds to purchase the figurine. As a result of such concerns, the definition is set to be broadened to include objects that are considered to be of historical, archaeological or cultural importance. This is more in line with the Waverly Criteria used by the Department of Culture, Media and Sport’s Reviewing Committee to place export bars on objects of national importance to try to find a buyer so they remain in the UK.
What do you do if you find treasure?
Once an item of treasure is discovered, the Act places an obligation on the finder to report it to the local coroner in the district where the find was made. This must be done within either 14 days of the find or within 14 days of the finder realising that the item might be treasure. The penalty for not reporting the treasure is either an uncapped fine or up to three months in prison. For example, two metal detectorists were jailed in 2019 for concealing their find of a Viking hoard worth £3 million.
Once reported, the coroner will hold an inquest into the find. The Act allows interested museums to acquire the treasure on behalf of the Crown for the benefit of the public. In such a scenario, the Treasure Valuation Committee (the “TVC”) will ask an independent expert to value the find and recommend how much the reward should be. The reward may then be paid to the finder, the occupier of the land where the find was made (such as a tenant), anyone who has an interest in the land and/or the finder. In most scenarios, the reward is shared 50:50 between the landowner and the finder. If the finder acted in bad faith such as by trying to hide the treasure, then they may not get any of the reward or only a small share depending on the circumstances.
If no museum wants to acquire the treasure and it is also not retained by the Crown, the coroner will return the items to the finder and they will be treated as if they were never the property of the Crown. The occupier and/or landowner will have 28 days in which to object to the treasure being returned to the finder.
For finds in England, the British Museum deals with the administration of the treasure process, including preparing the cases for the inquest and the payment of rewards.
Who owns treasure?
When treasure is found, it automatically vests in either the Crown or the franchisee of the Crown, if there is one, but the rights of original owners or their heirs, where known, are fully protected.
A franchisee of the Crown are bodies which have been awarded franchises of treasure trove by monarchs in the past. The key bodies that are believed to hold valid franchises today are the Duchy of Cornwell, the Duchy of Lancaster and the Cities of London and Bristol. Treasure that is found within these districts will vest with these bodies rather than the Crown.
What are the tax consequences if something is or is not treasure for the finder and the landowner?
Capital Gains Tax (CGT) on any gain arising from the disposal of both treasure and objects found which are not deemed to be treasure, is only calculated once ownership over the item is resolved.
(1) Treasure acquired on behalf of the Crown
If treasure is retained by the Crown and a reward is paid out to the landowner and / or the finder, this reward will be considered a pure gift of cash and there will be no tax consequences on this ex-gratia payment.
(2) Treasure not acquired on behalf of the Crown and objects which are not defined as treasure
Objects found which are not deemed to be treasure are considered chattels for CGT purposes. These objects benefit from the chattel exemption meaning that any CGT only applies where the disposal proceeds are more than the current threshold of £6,000.
The tax consequences for treasure not acquired on behalf of the Crown and objects not deemed to be treasure, differ depending on who is determined to be the owner of the find.
If the finder becomes the lawful owner of the object, as the object was merely found there will be no cost of acquisition for CGT purposes. If the finder later disposes of the object, a gain may arise on the disposal. If the object was found before 31 March 1982, rebasing applies to the CGT calculation so that a deduction may be available for the market value of the object at 31 March 1982.
Similarly, if the landowner becomes the lawful owner, a slight quirk is the date of acquisition of the object is the date the landowner acquired the land. The cost of acquisition will still be nil as no value of the land can be attributed to the object due to the fact that it was not known that it existed at the time of purchase. A gain may arise if the landowner later disposes of the object. Rebasing also applies if the land was held at 31 March 1982.
Finally, agreements are often drafted between landowners and metal detectorists that transfer a percentage interest in any find to the detectorist. The detectorist’s share is deemed to be transferred on the date of the agreement. Therefore, for the landowner, there will likely be two disposals for CGT purposes. The first is the disposal of the interest to the detectorist and the second is the disposal of their remaining interest if the object is later sold. The detectorist will also make a disposal of their part share upon sale.
This summary is intended to provide a first point of reference for current developments in aspects of the law. It should not be relied on as a substitute for professional advice.