VAT on alterations to listed buildings

The extension of standard rate of VAT on alterations to listed buildings was included in the recent Budget and will adversely effect many historic churches and chapels of all denominations. I have made the following submission to HMRC expressing my concerns:

" I am writing on behalf of the General Assembly of Unitarian and Free Christian Churches regarding the above consultation paper and would make the following submission.

We would wish to draw to your attention our concerns about one particular element, the withdrawal of the current rate VAT of zero on alterations to listed buildings. Although we are a small denomination probably at least half of our congregations possess church and chapel buildings that are listed. These are maintained almost entirely by volunteers and voluntary giving.

It is ironic that at a time when we have been working more closely than ever with English Heritage (for our English congregations) as part of their “Caring for Places of Worship” initiative that we find this undermined by these changes.

The consultation paper states that “the majority of the work covered by the relief consists of extension work which is not necessary for heritage purposes. The current rules therefore give a perverse incentive for change as opposed to repair… Removing the zero rate removes the perverse incentive to change listed buildings rather than repair them and ensures that all alteration work receives the same tax treatment”. There are major efforts to encourage the use of current and former church buildings for community use often and this often require alteration if that community use is to be widened – or even maintained. The consultation seems to assume that “repair” and “alteration” are mutually-exclusive alternatives: that is simply not always the case.

I note that it has been decided to extend the Listed Places of Worship Grants Scheme to cover alterations and the budget of the Scheme has been increased by £5 million for the current financial year. However, the LPWG Scheme is already under severe pressure and an extra £5 million will not meet the likely needs. There is no guarantee that funding for the Scheme will be maintained at that level in future years.

It is clear that the extension of the 20% VAT will place burdens on already stretched churches and chapels who have responsibilities to care for the nation’s heritage; in our case of the dissenting and nonconformist tradition of which we are marking the 350^th anniversary of this year and which has made such a contribution to the development of British society.

I would urge that you reconsider and that places of worship be excluded from this change."