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Property Handbook
Building Works
With the exceptions outlined below, all works to churches and manses, including repairs, maintenance and professional fees, are standard-rated for VAT purposes.
The construction of new church buildings and manses is zero-rated. Additions that have only a minimal physical connection with an existing building are also zero-rated provided they are capable of functioning independently from the existing building and have their own main entrance which is not the main entrance of the existing building. Any alteration to buildings granted ecclesiastical exemption (>661) can be zero-rated. The supply, installation and construction of certain facilities for the benefit of people with disabilities may also be zero-rated for VAT.
Since 1st April 2001, the Listed Places of Worship Grant Scheme has effectively reduced the rate of VAT for approved repairs to listed churches to 5%. The 2004 Budget reduced the effective rate for such works to zero by allowing the full 17.5% VAT to be recovered through the Scheme. This provision applies from 1st April 2004 to 31st March 2006. Details and application forms are obtainable from:
0845 601 5945 Listed Places of Worship Grant Scheme PO Box 609 Newport NP10 8QD
Where it is valid, zero-rating can be effective only if the trustees or the local church have issued to the contractor the relevant Certificate in a form approved by H M Customs and Excise. In the case of a new church, the certificate confirms that the building will be used only for a qualifying purpose, viz. for the charitable purposes of the Church. Trading, including commercial letting, could therefore invalidate the zero-rating and the VAT could become payable within ten years of construction (471). FuelAll church premises now attract VAT on fuel at the lower user or domestic rate in force, currently 5%, rather than at the standard rate. Business ActivityVery few churches are likely to engage in a business activity which could give rise to the need to register for VAT. At the date given at the foot of this page, the level of income from such activity which requires registration is £58,000 p.a. However, a few churches with very successful bookshops have reached this level of turnover and have had to register. A very high level of letting and/or hiring out of church premises might also produce income which exceeds the threshold for registration. If this situation arises, it is essential to notify the local office of H M Customs & Excise immediately as there are penalties for late notification.
Business activity at any level could give rise to a tax liability if the activity is not purely in pursuit of the charitable purposes of the URC (471).
Printed Media Advertisements
Notices and advertisements in newspapers, programmes, leaflets etc. may be zero-rated for VAT provided the advertisement is for fund-raising purposes and certain rules are observed. If it is stated that the advertisement is for a charity at the time that it is placed and zero-rating requested, there should be no difficulty in obtaining the concession.
More Information
The following Notices may be obtained free from H M Customs & Excise:
· 701/1 (January 1995) – Charities; · 701/7 (August 2002) – Reliefs for disabled people; · 701/10 (August 2003) – Zero-rating of Books etc. (see paragraphs 4.6 and 6.6); · 701/58 (March 2002) - Charity advertising and goods connected with collecting donations; · 708 (July 2002) – Buildings and construction
These notices can also be downloaded from:
www.hmce.gov.uk/forms/catalogue/catalogue
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