The Archbishop of Wales is urging the Government to reconsider a tax change to property warning it could threaten the future of some of Wales’ most important buildings.
In a letter to the Chancellor, George Osborne, Dr Barry Morgan says that plans to axe the zero rate of VAT on alternations to listed buildings will jeopardise many church projects and have a significant impact on local communities.
The Church in Wales estimates the change could cost its parishioners an extra £800,000 a year – 20% of the cost of work carried out. It owns nearly 1,000 listed churches including 29% of the Grade 1 buildings of Wales. It is urging people to sign an e-petition calling on the Chancellor to bring back zero rate VAT and to raise the matter with their local MP.
In his letter, the Archbishop said, “Whilst Places of Worship may be a small proportion of the total number of listed buildings in the UK, they are often of the highest quality and are often the most important listed building in a community. The impact of these new proposals on those communities is very significant. Many alteration works enable the Church to fulfill wider functions within communities than simply Christian worship. They enable visitor access, community space for meetings, special needs groups, social enterprises, even post offices!”
He warned that the Government’s hope that the new rules would encourage repair rather than change would backfire. Rather, he said, they would be an incentive to do nothing.
He said, “For listed places of worship, change is often very necessary to ensure the building plays its full part in the community. A simple example is the provision of access for people with disabilities where an ancient building will need to be changed. Elsewhere, including new facilities can make that building play a full part in providing for a community – it is not change for profit but change for the benefit of communities.
“I urge you to reconsider these proposals to support nationally important buildings at the heart of local communities.”
Meanwhile, Alex Glanville, head of Property Services at the Church in Wales, said the proposals were a “major blow for church buildings”.
He said, “In your village or town, the Church or Chapel is likely to be one of the most important and historic buildings in your area. Places of Worship, of whatever denomination, are cared for by the local congregation who are all volunteers. This means that local volunteer people have to find the money to maintain nationally important assets.
“This is a major issue for our listed churches many of which are carrying out alterations to make them more suitable for use by the community and to meet modern needs. This change could add 20% to the cost of such projects.
In 2010, Welsh congregations spent around £4.5m on repairs to Listed Buildings and £4m on alterations.
Mr Glanville said, “You will quickly see that adding 20% VAT to listed building alteration work would have meant that local people would have had to find nearly £800,000 of extra funds.
“It is difficult to know where this money would have come from; part might have been made up by grant giving bodies such as the Heritage Lottery Fund (though they did not fund all the work concerned). Most would come from yet more local fundraising activities or, potentially, a reduction in outward giving by congregations to people in need around the world (congregations gave nearly £2 million in 2010).”
Repair works have always attracted VAT at full rate but there has been some compensation for churches through the Listed Places of Worship Grant Scheme (LPWGS) which has returned in grant much of the VAT payable (though this too has been subject to cuts and amounts now to a return of about one-half to two-thirds of the VAT that is paid out).
Mr Glanville said, “It has been stated by the Government that LPWGS will be extended to allow claims for alteration VAT (as well as repairs) but without a massive increase in budget this pot of grant will be spread even more thinly.
“These provisions are a major blow for church buildings. There is a consultation period and lobbying is fully underway.”
You can support the campaign against VAT on alterations to listed churches in four ways:
- Sign the e-petition to bring back zero rate VAT on alterations to listed churches:
- The e-petition can be signed online now at: http://epetitions.direct.gov.uk/petitions/32229 . Whilst this refers to the Church of England specifically it applies to all listed places of Worship across the UK.
- Raise the matter with your local MP
- Let us know of any projects this change will affect and the implications [email protected]
- Respond to the consultation directly via http://www.hmrc.gov.uk/budget2012/vat-con-4801.pdf
Three recent examples illustrate the significance of the zero rating provisions.
- Christ Church, Pontblyddyn, Wrexham is a grade 2 listed building. At present it has fixed pews, no toilet or kitchen facilities, it is a large Victorian building which is extremely difficult to heat and therefore is only used for a couple of hours every Sunday. A Church Hall, which needed a lot of work doing to it to bring it up to modern standards, has been sold and plans have recently been approved to develop the Church into a multipurpose building. The villages closest to the church (Pontblyddyn and Padeswood) have no community facilities and therefore the church will be open for use by community groups. The change in VAT zero-rating may cost the Church something in the region of £20,000 to £30,000. This may be the difference between being able to start the project immediately and having to instigate a Fund Raising Campaign whilst applying for grant funding. The church less than 60 regular members who are all keen to see the project completed, but who are mainly pensioners and already give sacrificially to keep their church open.
- St Illtud’s Church, Llantwit Major: a project to rebuild the ruined Galilee Chapel to provide for the display of schedule inscribed stones, interpretation of the Grade 1 listed church to visitors and a meeting/education room. This £500,000 project will largely be eligible for zero rating so loss of this will increase costs by £100,000. This will increase the demand on the Heritage Lottery Fund which is the primary source of funds.
- St Nicholas Church, St Nicholas, Cowbridge: a project to install a heating and lighting system with an environmentally friendly Air Source Heat Pump and low energy lighting. The new heating system will enable wider use of the building and ensure a better temperature and humidity for the conservation of the fabric of the building. The cost is around £40,000 and the loss of zero rating may put the project in jeopardy.
