Unexpectedly the Chancellor announced in the Budget that approved alterations to listed buildings - which, unlike repairs and maintenance are currently zero-rated - will be charged at the standard rate of 20 percent. This will cost Church of England congregations up to £20 million per annum on works to its 12,500 listed church buildings, assuming of course parishes and cathedrals can now afford to go ahead and undertake the works required.

This is a real blow to communities who are seeking to maintain and develop their churches (including improved lavatory, kitchen, disability and energy saving facilities) to enable churches to be more widely used by the community. The 20 percent VAT charge will also negatively impact bell hanging and organ building, both traditional craft industries, where some schemes currently enjoy zero rating.

The day after the Budget the Bishop of London and Second Church Estates Commissioner wrote to the Chancellor asking him to keep alterations to listed churches zero-rated.

The accompanying Treasury Document also stated that the Government was 'extending' the scope of the Grant Scheme administered by the Department of Culture, Media and Sport to include alterations. It did not; however specify any increase in funding of the scheme. Without a cash increase to the Listed Places of Worship Grant Scheme, which is already inadequate to cover all repair claims, the current scheme will simply be divided into even smaller amounts among a larger group of claimants. So, far from being additional help for churches, the effect of the extension will be to reduce the proportion of the VAT costs refunded for repairs and maintenance.

Further action: please contact your local MP with examples of how this extra 20 percent charge will impact on your communities and fundraising. You may like to send this information also to your local DAC.

The Government's consultation document can be downloaded at http://www.hmrc.gov.uk/budget2012/vat-con-4801.pdf

The budget document can be downloaded here (the relevant part is Chapter 2 para 179): http://www.hm-treasury.gov.uk/budget2012_documents.htm

Letters have been sent to the Chancellor from:
The Bishop of London the Rt Revd Richard Chartres, Chair of the Cathedral and Church Buildings Division

Tony Baldry MP, the Second Church Estates Commissioner

Anne Sloman, Chair of the Church Buildings Council

Cathedral and Church Buildings Division
March 2012