This brief section is not intended as comprehensive guide to VAT but as a starting point for those investigating the issues of VAT and how it may impact their church and a place to signpost sources of guidance and advice. As with many statutory schemes, please be aware that the applied rates and registration thresholds change from time to time.
Churches, like all charities whether registered or excepted, are required to pay VAT. However, there are a number of concessions that are currently available to churches and some general charities.
Building Repairs and Maintenance
VAT is applied to all aspects of church building repairs and maintenance. However, if your church building is listed, then a grant covering the cost of the VAT (for qualifying work only) can be claimed under the Listed Places of Worship (LPW) Grant Scheme. For more on this Scheme see the summary and links on our Capital Funding
New Church Buildings
The construction of new church buildings are generally zero-rated for VAT. Approved alterations to listed buildings are also generally zero-rated as long as they will be used for 'qualifying purposes'.
Water supplies to churches and church halls are zero-rated. Electricity and gas supplies are subject to a reduced VAT 5% rate, provided that all business usage (hall hire, etc.) falls within set limits. Use the provided links to check current thresholds, rates and limits.
The purchase of pre-printed envelopes, etc. for fund raising purposes is currently zero-rated.