Government agrees £30 million extra to resolve VAT concerns
The Church of England has welcomed today's agreement with the Government over the future funding of alterations and repairs to its 12,500 listed buildings, which will provide £30 million a year extra money. This is on top of the £12 million already in the Listed Places of Worship Grant Scheme (LPWGS).
The Bishop of London described this as an acknowledgment from Government of the unique heritage value to the nation of cathedrals and churches and the way in which these alterations are enabling them to serve their local communities in a range of ways alongside being centres of worship.
Despite not persuading the Government that maintaining zero rated VAT for alterations is the best way forward, church leaders today said that the £30 million a year extra money that the Chancellor has committed to the LPWGS will enable the equivalent to the VAT bill to be paid out on all alterations and repairs to listed church buildings. The Scheme pays out to those denominations and faiths with listed buildings.
The LPWGS will in future be ring fenced and no longer vulnerable to cuts in departmental budgets and it is planned to re-introduce monthly pay outs from October. The scheme will be guaranteed for the duration of this Parliament. Parishes have shown they need a much greater degree of certainty in the funding they receive and this will now be met by ironing out some of the more unhelpful characteristics of the current LPWGS.
The Bishop of London, the Rt Rev Richard Chartres who chairs the Cathedrals and Church Buildings Division and who led the discussions with the Treasury said "We owe a debt of gratitude to the Second Church Estates Commissioner Tony Baldry, for his role in brokering this agreement, and to Anne Sloman, and Janet Gough who have worked tirelessly in a very short window of opportunity but the Chancellor made it very clear that he was moving to ease the impact on the churches in recognition of the massive contribution made by congregations up and down the land to the life of their communities".
Anne Sloman, Chair of the Church Buildings Council said, "the fact that the Treasury offer went from £5million to £30million is a recognition of the tremendous value for money to the nation as a whole that our buildings represent. We are grateful to parishes up and down the land who have lobbied so hard since the Budget to bring this point home to the government, and even more grateful for the massive contribution volunteers make by their efforts, week in and week out, to keep our beautiful churches in good repair for worship and adapted to serve the community in so many creative ways."
Listed Places of Worship Grant Scheme
A House of Commons Library note on 'VAT & Churches' (13/4/12) sets out the background to the establishment of the Listed Places of Worship Grant Scheme, administered by DCMS, which currently refunds the VAT paid on repairs (not alterations) to UK listed places of worship, up to a specified amount: http://www.parliament.uk/briefing-papers/SN01051.pdf
Prior to the Budget DCMS funding for the LPWG scheme was cut from £23 million during 2010-11 to £7 million during 2011-12.
Additional information about the Listed Places of Worship Grant scheme and the effect of the Budget announcement on listed churches can be found on the Churchcare website at: http://www.churchcare.co.uk/news.php
Churches and Cathedrals - Further
In 2010-11 £120 million was spent on repairs, of which £23 million of VAT was reclaimed from the Listed Places of Worship Grant scheme.
- Across the English dioceses an estimated £100million is spent on alterations to listed church buildings each year. 45% per cent of England's Grade I listed buildings are Church of England churches.
- 12,500 churches are listed, out of a total stock of 16,000 (78%).
- These listed churches are heavily biased towards medieval structures - the CofE has 8,000 of these (60% of our listed churches) yet nationally, medieval buildings form only 15% of listed buildings.
Listed Places Worship New Grants Scheme
Q & A
1. What are the new arrangements?
• HM Treasury has guaranteed an extra £30 million per year for the rest of this Parliament for the Listed Places of Worship Grant Scheme - in addition to the £12 million per year - for alterations and repairs to listed places of worship. I.e. the total annual value of the new scheme will be £42 million.
2. When does this come into effect?
• From 1 October 2012.
3. What does this mean for claimants?
• From 1 October 2012 all claimants should receive a full
payout on the equivalent of the VAT they have incurred on repairs
and alterations to listed places of worship. The scheme will be
reviewed in October 2013 to check it is on target, we hope no
adjustments will need to be made but it is very difficult to
estimate demand at this stage and the fund is cash limited.
• The aim is to move to monthly disbursements (current quarterly payments) for the new scheme.
4. What protections are in place for this new scheme?
• The Government has promised ring-fenced funding of at
least £42million per year, guaranteed by HM Treasury and the DCMS
for the rest of this Parliament.
• The LPWGS will be protected from any further spending reductions affecting the current Spending Review period.
• The scheme will be reviewed every six months from October 2013.
5. What are the transitional arrangements to protect projects at an advanced stage?
• The Government has stated that all projects with a signed
contract by Budget Day i.e. 21 March 2012 will be honoured under
the current arrangements (zero rate VAT on alterations to listed
• As part of a consultation it is prepared to consider other criteria to identify projects at an advanced stage and also to accommodate large projects by extending the period within which these projects must be completed.
• The Cathedral and Church Buildings Division has proposed that the transitional period be extended to March 2014 to accommodate larger projects and that the granting of a faculty or other planning permission and/or a written application for funding be accepted as indicators that projects were at a sufficiently advanced stage on Budget Day to qualify for zero rating on alterations to listed buildings.
• The HMRC consultation closes 18 May 2012. We have been promised "generous transitional arrangements". As soon as we know what that means in practice we will disseminate details.
6. Who will manage the new LPWGS?
• A "dual key" is being set up with details of the scheme
and subsequent changes needing formal sign off by HM Treasury and
• The funding for and operating the scheme will continue to flow via DCMS.
7. What is included under the new scheme?
• The new scheme will retain the current restrictions on
which VAT costs associated with the repair and maintenance of
listed places of worship are not eligible for compensation - i.e.
professional fees, organs, bells, and clocks and other listed
buildings owned by cathedrals and churches.
• These categories will be kept under discussion in future six monthly reviews.
17 May 2012