The Bishop of Chelmsford, Rt Revd Stephen Cottrell, has called on the Chancellor to keep zero-rate VAT on alterations to listed church buildings.

The Bishop said: “Listed church buildings are vital community assets, contributing a huge amount to community cohesion and development. From time to time they need to be adapted if they are to be made useable for a wide variety of community purposes and to meet modern expectations, not to mention comply with contemporary regulations.

“The burden of raising the money for these repairs and alterations rests with the local church community. If VAT is levied on listed church building alterations as the Chancellor proposes, then at a stroke 20 per cent is added to the cost. This is a massive increase.  It will certainly deter churches from making changes to their buildings. In some cases it will scupper plans altogether.

“At a time when local churches are already facing huge additional costs from metal theft and higher insurance premiums, this feels like a kick in the teeth. Local neighbourhoods, especially in rural areas, will be the losers.”

St Christopher’s Church in Willingale near Ongar is one of the churches that will be badly affected. Dr Simon Baker, PCC Treasurer at St Christopher’s, commented: “With a project costing tens of thousands of pounds, the additional 20 per cent is a cost we cannot recover. As a small church we will face significant challenges in raising the additional funds.”

The Bishop added: “Perhaps it didn’t seem this way when the Chancellor thought up this scheme, but what it amounts to is a tax on churches. We receive precious little government help as it is. This will make serving the local community that much harder.

“The government says it wants to build a Big Society and support the nation’s stressed communities at a time when they are feeling economic hardship. This tax sends a different message.”

Further information

1. VAT at the standard rate of 20 per cent will be imposed on alterations to listed church buildings from 1 October 2012 unless the Chancellor of the Exchequer changes his mind.
2. The Bishop of Chelmsford has written to the Chancellor, Mr George Osborne MP, asking him to re-consider the proposal.
3. Church buildings, including cathedrals and retreat houses, are almost entirely maintained by volunteers and voluntary giving. They are being adapted to make them suitable for use by the community. The extra cost this will impose will seriously threaten the continuation of such works.
4. Churches are not-for-profit organisations and they exist for the benefit of the neighbourhoods they serve.  Churches open their buildings for use as drop-in centres for counselling and support, advice bureaux, after-school clubs, meeting and conference rooms and occasional exhibition and concert halls. Some contain village shops. They may also be linked to other essential community resources such as health centres and schools. Retreat houses, such as the Diocesan House of Retreat at Pleshey, are open to local neighbourhoods and also attract people from further afield who return to service in their own community.
5. The cost of adaptations to church buildings is already higher than for many types of building because of the need to comply with the stringent restrictions that apply to them.
6.  Churches are already unreasonably taxed on the cost of church building repairs and maintenance.
7. The cost of church repairs is particularly high due to the exacting standard of craftsmanship required on heritage buildings. Alterations to listed church buildings are very expensive for the same reason, and imposition of VAT on these adaptations would be a further tax.
8. he Church of England has created an e-petition calling on the Chancellor to bring back zero rate VAT to alterations to the CofE’s 12,500 listed churches: http://epetitions.direct.gov.uk/petitions/32229.
9. This follows the recent launch of a consultation by HM Revenue Customs on VAT charging to approved alterations to listed buildings: http://bit.ly/HmjpDV . The consultation closes on 4 May 2012.
10. Government assistance for church buildings is virtually non-existent Extending the remit of the Listed Places of Worship Grants Scheme, with no additional funding, will go no way to mitigating the proposed tax. On the contrary it means that a shrinking pot will be stretched even further.