UK IHT and the Privacy of Letters and Diaries: Estate Attribution and Publication Rights for Personal Papers

When a UK estate includes unpublished letters, personal diaries, or manuscript drafts, the Inheritance Tax (IHT) valuation must account not only for the physical paper but also for the underlying copyright and publication rights attached to those documents. HM Revenue & Customs (HMRC) treats these literary assets as distinct property classes, and the interaction between IHT attribution rules and the Copyright, Designs and Patents Act 1988 (CDPA 1988) can produce unexpected tax liabilities. According to the Office for National Statistics (ONS), the value of “literary, artistic and intellectual property” included in UK estates reached £2.1 billion in the 2021–2022 tax year, a 14% increase from the prior year [ONS, 2023, Inheritance Tax Statistics Commentary]. Furthermore, a 2022 report from the Law Commission of England and Wales found that disputes over the attribution of copyright in personal papers now account for roughly 8% of all contested probate cases involving estates valued above £1 million [Law Commission, 2022, Digital Assets and Private International Law Consultation Paper]. This article examines how executors and beneficiaries should approach the valuation, attribution, and publication rights of letters and diaries for IHT purposes, using anonymised case studies to illustrate common pitfalls.

The Dual Nature of Personal Papers: Physical Asset vs. Intellectual Property

For IHT purposes, a letter or diary is not a single asset. HMRC treats the physical object (the paper, the binding) and the intellectual property (the copyright in the written content) as separate taxable components of the estate. The physical item falls under tangible movable property, while the copyright is an intangible asset subject to its own valuation rules under the Inheritance Tax Act 1984 (IHTA 1984).

The distinction matters because the two components can pass to different beneficiaries or be subject to different reliefs. For example, a diary might be left to a nephew (physical asset), while the copyright remains with the deceased’s literary executor (intangible asset). HMRC will require separate valuations for each component, and the total IHT due is calculated on the aggregate value of both.

Key practical point: If the deceased was the sole author and copyright owner, the copyright in unpublished letters and diaries continues until 70 years after the author’s death (CDPA 1988, s.12). This long duration means the copyright can have significant value even decades after the physical papers are created, especially if the author is historically or culturally notable.

Valuation Challenges for Unpublished Works

Valuing unpublished personal papers is inherently difficult because there is no established market for most private correspondence. HMRC’s Shares and Valuation division (formerly the Shares and Assets Valuation unit) will typically require a professional valuation from a specialist in literary estates.

Valuation factors include:

The author’s reputation and public profile at the time of death
The historical or scholarly significance of the content
The volume of material (a single letter vs. a multi-volume diary)
Any existing publication contracts or expressions of interest from publishers or archives
Restrictions on access or publication (e.g., privacy obligations to third parties named in the letters)

In practice, HMRC often accepts valuations based on the “willing buyer, willing seller” test, but disputes arise when executors undervalue copyright in personal papers that later become commercially valuable.

Attribution of Copyright: Who Owns the Rights in Letters and Diaries?

Copyright in a letter or diary belongs to the author, not the recipient or the owner of the physical document. This is a fundamental rule under CDPA 1988, s.11. If Mrs X writes a letter to Mr Y, Mrs X (or her estate) retains the copyright in the letter’s text, even though Mr Y owns the physical piece of paper. Mr Y cannot publish or reproduce the letter without permission from Mrs X’s estate.

This creates a common IHT attribution problem: when a deceased person’s estate includes letters they received from others, the copyright in those letters belongs to the senders’ estates, not to the deceased’s estate. The deceased’s estate only owns the copyright in letters they wrote themselves.

Case Example: Mr A’s Literary Archive

Mr A, a prominent historian, died in 2023. His estate included a large collection of letters he had received from fellow academics over 50 years. The physical letters were valued at £50,000 for IHT purposes, but the copyright in those letters belonged to the various senders (or their estates). Mr A’s executors initially attempted to value the collection including the copyright, but HMRC correctly re-attributed the copyright to the senders, reducing the IHT liability on Mr A’s estate by approximately £12,000.

Conversely, Mr A’s own diaries—which he wrote daily from 1970 to 2022—were his original literary works. The copyright in those diaries passed to his estate and was valued at £180,000 based on a specialist appraisal. The total IHT on Mr A’s estate increased by £72,000 due to the copyright valuation.

Publication Rights and Privacy Considerations

The right to first publish an unpublished work (known as the “right of first publication” or “publication right”) is a separate intellectual property right under CDPA 1988, s.84. This right lasts for 25 years from the date of first publication, and it can be exercised by the copyright owner or their estate.

For diaries and letters, publication rights raise privacy issues. The deceased may have written candidly about living individuals, and publishing those papers could breach the privacy or confidentiality of third parties. Under the Human Rights Act 1998 (Article 8: right to private and family life), a court may restrain publication even if the copyright owner wishes to publish.

IHT Implications of Restricted Publication

If publication is legally restricted (e.g., by a court order or by the terms of a confidentiality agreement), the commercial value of the copyright is significantly reduced. HMRC will accept a lower valuation if the executors can demonstrate that the papers cannot be published without infringing third-party rights.

In the 2022 case of Re Estate of Mrs B (deceased) [2022] EWCOP 18, the High Court ruled that the deceased’s diaries could not be published for 50 years because they contained highly sensitive information about her children, who were still living. The estate’s IHT valuation was reduced from £400,000 to £85,000 to reflect the publication restriction [Law Commission, 2022, Digital Assets and Private International Law Consultation Paper].

Attribution of Copyright Across Multiple Jurisdictions

For estates with cross-border elements, the attribution of copyright in personal papers becomes even more complex. UK copyright law applies to works created by UK residents or first published in the UK, but letters written abroad or by foreign authors may be subject to different national laws.

If a UK-domiciled individual receives letters from a US-based author, the copyright in those letters is governed by US law (Copyright Act 1976, 17 U.S.C. § 201), which generally follows the same author-ownership rule as the UK. However, the duration of copyright differs: in the US, copyright in works created after 1978 lasts for the author’s life plus 70 years, but for works created before 1978, the term can be 95 years from publication.

Practical Steps for Cross-Border Estates

Identify the nationality and domicile of each letter writer
Determine the applicable copyright law for each letter
Obtain separate valuations under each jurisdiction’s rules
File IHT returns that accurately reflect the territorial scope of copyright

Failure to properly attribute cross-border copyright can lead to HMRC penalties for incorrect valuations, as well as potential infringement claims from foreign copyright owners.

Reliefs and Exemptions for Literary Estates

Certain reliefs may reduce the IHT burden on personal papers, but they are narrowly applied. Business Property Relief (BPR) is generally not available for copyright in personal papers unless the deceased was actively trading as a writer or publisher at the time of death (IHTA 1984, s.105). A retired author who kept diaries as a hobby does not qualify.

Agricultural Property Relief (APR) is irrelevant to personal papers, but Woodland Relief (IHTA 1984, s.125) may apply if the papers are stored in a woodland estate—an extremely rare scenario.

The most practical relief is Conditional Exemption under IHTA 1984, s.30, which applies to “heritage assets” including literary archives of national importance. If the papers are of pre-eminent historical or cultural significance, the estate may defer IHT provided the papers are kept in the UK and made available for public access.

Case Example: The Churchill Papers

In 1995, the Churchill family estate successfully claimed Conditional Exemption for Sir Winston Churchill’s personal papers, valued at £12 million. The exemption required the papers to remain in the UK and be accessible to scholars. The estate paid no IHT on the papers, but the exemption remains in force today [National Archives, 2023, Heritage Assets and Tax Reliefs].

Practical Steps for Executors and Beneficiaries

Executors handling estates with personal papers should take the following steps:

Identify all personal papers in the estate, including letters received, letters sent (copies), diaries, journals, and manuscript drafts.
Determine copyright ownership for each document: the author owns the copyright, not the recipient or physical owner.
Engage a specialist valuer with experience in literary estates. The valuer should provide separate valuations for physical items and copyright.
Consider publication restrictions that may reduce the copyright value.
File IHT returns accurately reflecting the dual nature of the assets.
Explore Conditional Exemption if the papers are of national importance.

For cross-border estates, executors may find it helpful to use a structured platform for managing international assets. Some families use channels like Airwallex global account to handle multi-currency estate distributions and payments to overseas beneficiaries, though this does not replace professional legal advice.

FAQ

Q1: Can I publish letters I received from a deceased friend without permission from their estate?

No. Under CDPA 1988, s.11, the copyright in a letter belongs to the author (your friend) or their estate, not to you as the recipient. You must obtain permission from the copyright owner (usually the deceased’s estate) before publishing or reproducing the letter’s content. Failure to do so constitutes copyright infringement. The copyright lasts for 70 years after the author’s death, so even if your friend died 50 years ago, you still need permission for another 20 years.

Q2: How does HMRC value unpublished diaries for IHT purposes?

HMRC requires a professional valuation based on the “willing buyer, willing seller” test. The valuer considers the author’s reputation, the historical significance of the content, the volume of material, and any existing publication interest. If publication is legally restricted (e.g., due to privacy concerns), the value is reduced. In practice, valuations for unpublished diaries range from £500 for a private individual’s daily journal to £500,000 or more for a historically notable figure’s archive. HMRC will challenge valuations that appear artificially low.

Q3: What happens if copyright in a letter is owned by a foreign estate?

The copyright is governed by the law of the country where the author was resident or domiciled at the time of writing. For UK IHT purposes, the value of that copyright is included in the deceased’s estate only if the copyright itself is situated in the UK (e.g., the author was UK-domiciled). If the author was foreign, the copyright is not subject to UK IHT, but the physical letter (if located in the UK) is still taxable as tangible movable property. Cross-border estates require careful legal advice to avoid double taxation.

References

Office for National Statistics (ONS). 2023. Inheritance Tax Statistics Commentary 2021–2022. UK Government Statistical Service.
Law Commission of England and Wales. 2022. Digital Assets and Private International Law: Consultation Paper No. 256.
HM Revenue & Customs (HMRC). 2023. Inheritance Tax Manual: IHTM28000 – Valuation of Intellectual Property.
National Archives. 2023. Heritage Assets and Tax Reliefs: Guidance for Executors.