Churches lose tax break for repairs under savings plan

Culture Minister John Penrose said VAT on repairs to fixtures and fittings could no longer be claimed back by places of worship, due to Government efficiency savings.

The Listed Places of Worship grant scheme currently allows places of worship, of any faith or denomination, to claim a grant equal to the VAT paid on eligible works.

Mr Penrose said the scheme would now exclude clocks, bells, organs, pews and professional services such as architects’ fees.

The future of the scheme beyond this financial year will become clear in the Comprehensive Spending Review on October 20.

Mr Penrose said: “Everyone is being asked to make savings so I’m afraid we cannot exclude this scheme, however much I would like to.

“We asked representatives of the major denominations how they would prefer the savings to be made, and it was agreed that reducing the scope was the least damaging option for making savings, whilst still allowing claims for all other sorts of work.”

The changes will come into effect from January 4 and will apply until the current end date of the scheme on March 31.

Crispin Truman, chief executive of the Churches Conservation Trust, said: “The Listed Places of Worship scheme has helped around 9,000 communities to repair their historic places of worship.

“Any loss of scope under the scheme is to be regretted, but we appreciate that the department needs to contribute to the savings needed and are pleased that denominations had a chance to comment on the proposals.

“We welcome the decision to meet the VAT increase from January albeit on slightly reduced scope, and would renew our calls for the scheme to be continued from April 2011.”

The Listed Places of Worship scheme has paid out just over 110m since it started in 2001.

It allows churches to claim back VAT for repairs and maintenance on the fabric of a protected building, including its foundations, walls and roof. From April 2006, the scheme was amended to also cover the VAT costs incurred on fixtures and fittings.