The rules relating to VAT can be extremely complex and any church looking to start a major project, or undertaking significant trading activities, should always seek advice.
This page is not intended to be comprehensive guide to VAT; such a guide would go far beyond the scope of this website. Rather, it is provided as a starting point for those investigating the issue of VAT and how it may impact their church.
As with many statutory schemes, the applied rates and registration thresholds change from time to time. Web links have been provided to quickly take you to the relevant government website pages that report current rates, etc.
Churches, like all charities whether registered or excepted, are required to pay VAT. However, there are a number of concessions that are currently available to churches and some general charities.
Building Repairs and Maintenance
VAT is applied to all aspects of church building repairs and maintenance. However, if your church building is listed, then a grant covering the cost of the VAT (for qualifying work only) can be claimed under the Listed Places of Worship Grant Scheme. Although this scheme was due to end in March 2011, the Department for Culture, Media and Sport has recently announced (20 October 2010) that it will now continue for a further four years. It should also be noted the the scope of qualifying works will be reduced for all applications made after December 2010 and an annual maximum limit on grants awarded will also be applied.
Please visit the LPW Grant Scheme website for details of the scheme, what work can qualify and an application form.
New Church Buildings
The construction of new church buildings are generally zero-rated for VAT. Approved alterations to listed buildings are also generally zero-rated as long as they will be used for 'qualifying purposes'.
Water supplies to churches and church halls are zero-rated. Electricity and gas supplies are subject to a reduced VAT rate, provided that all business usage (hall hire, etc.) falls within set limits. Use the following link to check current thresholds, rates and limits.
The purchase of pre-printed envelopes, etc. for fund raising purposes is currently zero-rated.
The following contacts are not VAT experts. However, they are available to discuss the issues and give some help towards navigating the pitfalls.
Resources Finance Officer
t: 0151 705 2180
Resources Buildings Adviser
t: 0151 705 2180
The Parish Resources website contains a series of funding guides. Guide number 15 covers the issue of VAT and VAT recovery.
Further pages on this website also give general advice and information in regard to church buildings and building projects.