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Treasury to reimburse Church on new VAT: The Church of England Newspaper, May 4, 2012 May 11, 2012

Posted by geoconger in Church of England, Church of England Newspaper, Development/Economics/Govt Finances, Politics.
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The Chancellor of the Exchequer has promised to reimburse listed churches for the costs of VAT for church improvements.

Speaking in the House of Lords on 24 April 2012, Treasury minister Lord Sassoon confirmed that an agreement had been reached the previous day by the Bishop of London, the Second Church Estates Commissioner and the Chancellor, Mr. George Osborne.

“The Government are fully compensating churches for the changes in VAT,” Lord Sassoon told the Lords.  Asked how the Treasury would mitigate the £20 million in additional cost to churches in its budget proposals, Lord Sassoon said the Chancellor “made it clear” in his meeting with Bishop Richard Chartres and Tony Baldy MP “that the £5 million which the Government have committed to the listed places of worship grant scheme in the Budget is on top of the £12 million which the scheme already had.”

“We accept, having seen the churches’ numbers, that the VAT change will indeed be more than £5 million and that we need to commit more money, and discussions will continue next week to look at what the projected numbers and our commitment should be,” the minister said.

Lord Sassoon further stated that projects already underway would not be subject to the tax.

“Contracts in place on [Budget day] will retain the zero rate if the work is performed by 20 March 2013.”

In last month’s Budget, Mr Osborne announced a 20 per cent tax on alteration work on listed buildings.  The Treasury said the new tax would be imposed to remove a “glaring anomaly”, where alterations to listed building were exempt from VAT, but repair and maintenance work was not.  It was also couched in terms of fairness, with Coalition spokesmen saying it would prevent the owners of listed mansions avoiding paying VAT if they added a swimming pool.

However, the plan would also tax churches. The Bishop of Bath & Wells asked Lord Sassoon whether the government had thought through the implications of its decision, suggesting that it was at odds with its Big Society agenda.  “Of the 563 churches in my diocese, 503 are listed-some 89 per cent. Their upkeep relies almost entirely on voluntary fundraising and support from their congregations. In promoting the big society, many wish to open those buildings to wider community use. What incentive does the minister believe is being created for congregations to do so by making them pay VAT up front only to claim it back through a scheme that is not adequately funded,” the bishop asked.

Lord Sassoon responded the government did not “want to see anything that incentivises people against repairing and maintaining and therefore preserving the core heritage features of the property, so we think that it is right to put alterations, repairs and maintenance on an even basis.”

However, a spokesman for the Archbishops’ Council told ThirdSector the reimbursement scheme was not ideal. “As a sort of concession it seems the Chancellor has said expenditure on alterations, as well as repairs, will now be eligible for this scheme, and it will have some extra money,” he said.

“But it’s pretty easy for the government to get rid of public expenditure. This scheme has already got less generous since it was introduced. It’s already being used pretty much at capacity,” the spokesman said.

First printed in The Church of England Newspaper.

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