A “pivotal” painting by artist Peter Doig, whose work is said to be too expensive for a public gallery to buy, has been donated to the nation.

National Galleries of Scotland (NGS) said it is “thrilled” to acquire At The Edge of Town, painted between 1986 and 1988, and said it will fill one of the greatest gaps in its contemporary collection.

NGS said that for many years it had been well beyond its means to buy such a painting by Doig, whose works regularly sell for several million pounds.

However, the artist and his family arranged for the galleries to receive the painting through the Acceptance in Lieu scheme, which enables people to transfer important artworks into public ownership while settling inheritance tax.

At the Edge of Town enters the collection via the estate of Bonnie Kennedy, Doig’s first wife.

Peter Doig said: “I am greatly honoured to have this early and pivotal work in Scotland’s national collection, and on display in Edinburgh, the city of my birth and some of my earliest memories.”

Doig was born in Edinburgh in 1959 to Scottish parents and moved to Trinidad at the age of two.

He grew up in Canada then moved to London to study at Wimbledon School of Art (1979-1980) and Saint Martin’s (1980-83).

His career took off in 1990, while he was studying for a Masters degree at the Chelsea School of Art, and he was nominated for the Turner Prize in 1994.

In contrast to the urban, post-Pop art works Doig made while he was in London, At the Edge of Town was painted in a rural area near Toronto and is described as being, in effect, his first landscape.

Simon Groom, director of modern and contemporary art at NGS, said: “Peter Doig is one of the most highly-regarded painters working anywhere in the world, and whose prices put him well beyond the budget of any public institution.

“At the Edge of Town is a painting any major museum in the world would love to have, and it is only through the help of the Acceptance in Lieu scheme that we are able to acquire the painting for the nation.

“As an Edinburgh-born artist, this work by Doig fills one of the greatest gaps in our contemporary collection. We are enormously grateful to Peter Doig and his family for making it possible for us to acquire this important painting.

“We are thrilled to accept the work, which can be seen in our current exhibition, New Arrivals: From Salvador Dali to Jenny Saville; at the Scottish National Gallery of Modern Art.”

In 2013, the National Galleries of Scotland hosted Peter Doig: No Foreign Lands, a major exhibition which attracted widespread acclaim and drew visitors from all over the world.

The acceptance of the painting, offered by the Kennedy Doig family in loving memory of Bonnie Kennedy, settled £2,841,370 of tax.

Scotland’s Culture Minister, Neil Gray, said: “This monumental work, painted in the 1980s, marks a formative moment in the artist’s international career as it greatly informs the development of what would become his signature style over the next decade.”

Edward Harley, chairman of the Acceptance in Lieu Panel, said: “Doig was born in Scotland and this pivotal early work in his oeuvre is the first of his paintings to enter a public collection in Scotland.

“I do hope this example will encourage others to use the scheme to bolster our national collections.”