Church of Scotland leaders to fight new tax rules over VAT exemption

Published on Saturday 8 May 2010 20:09

THE Church of Scotland is mounting a protest to reverse new tax rules it claims will cost it millions of pounds.

Kirk leaders, who are already facing an annual budget deficit of nearly 6m, are preparing to mobilise their congregations for a mass lobby of the UK's new MPs against an end to a decade-old VAT exemption on all repairs to listed places of worship.

The last government ruled that all religious groups would have to start paying full 17.5% VAT on such work starting in April next year.

The Church of Scotland alone has around 1,000 Kirk buildings that are listed historical or architectural monuments, many in poor repair. The body – like other denominations – is also expected to see declining funding for repairs of such buildings from Historic Scotland, and the Heritage Lottery Fund.

David Robertson, secretary and clerk to the Church of Scotland General Trustees, said the VAT scheme had been a vital source of revenue.

"To date, the scheme has saved UK churches well over 100 million, and we would urge the new government to reconsider the proposals.

"Given that roughly half of our church buildings are listed, its demise could potentially cost Church of Scotland congregations millions of pounds.

"Already both Historic Scotland and the Heritage Lottery Fund treat the VAT repayment as an income stream, thereby reducing the amount of funding given to congregations applying for a grant.

"We would be interested to know whether both organisations will be revising their funding stipulations should the scheme indeed be wound down next March."

Church of Scotland officials, along with colleagues from the Church of England and other denominations, have already made representations to ministers – but want to make sure their members keep newly elected MPs aware of the issue.

The Kirk is in serious financial straits. The head of its ministries council, which is responsible for clergy rather than buildings, has described the Church's budget deficit of 5.7m as "completely unsustainable".