'Unfair' VAT Building Tax to Hurt Churches

Church leaders and heritage groups criticise the ‘crippling, unfair tax’ that could see many listed buildings being left to deteriorate.

George Osborne announced in the Budget the closure of the zero rate VAT loophole on alterations to protected buildings, which in the accompanying consultation document VAT: Addressing borderline anomalies cites ‘mostly listed residential dwellings’ would be affected by, but acknowledges the amendment would also impact ‘buildings used for charitable and other residential purposes’.

A Treasury spokesperson said: ‘It is not right that a church already pays VAT on repairs but a millionaire can install a swimming pool in his listed mansion, VAT free. This simply corrects this anomaly in the VAT system.’

While closing the loophole for millionaires adding extensions to their listed houses may be an acceptable move for most of the general public, the Church of England fears up to £20m a year extra would now need to be spent 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’.

Wakefield Cathedral, which started building work on the 19 March 2012, will now see its bill increase by £200,000, putting the ‘whole project into joepardy’. In response to the VAT change, Pamela Greener, the wife of the Dean of Wakefield has written and recorded a light-hearted song for YouTube that has also been sent to the chancellor, informing him of the church’s plight.

The Dean of Wakefield, the Very Revd Jonathan Greener, said: ‘Music is a powerful means of communication which is why it is such an important part of Cathedral life. So I was delighted that my wife should write this song and make this video to support us all in our campaign to stop this crippling, unfair tax.’

English Heritage (EH) has mixed feelings about the changes, it said in a statement: ‘While EH notes that the removal of VAT relief on approved alterations to listed buildings will eliminate a perverse incentive to carry out more changes to a listed building than are necessary, we recognise there is also a potential negative impact on private owners, charities and places of worship.

‘We are currently seeking clarity on a number of detailed issues with HMRC in order to make a full assessment of the impact of the proposed changes.’