£30m VAT concession to support churches is welcome, but full charity exemption is needed, say CFG and NCVO

Charity Finance Group (CFG) and NCVO have stressed that Government must go further than the additional £30m for the Listed Places of Worship grant scheme and exempt all charities from the planned VAT imposition on alterations to listed buildings. Removing the zero rating will bring huge costs to charities operating in listed buildings, yet the scheme is only available for churches and other listed places of worship, with no equivalent fund in place to compensate other affected charities.

In their consultation response, submitted today, the umbrella bodies warned that without a full exemption for charities the measure will have a significant impact on some charities, their beneficiaries and the UK’s heritage.

As part of Government measures, announced in the budget, to address anomalies in the tax code, all alterations to listed buildings will soon be charged VAT at the standard rate, replacing the current zero rating. Many charities own or use listed buildings and for many of these the additional 20% charge will simply make essential alteration projects unaffordable, particularly in a challenging funding environment where there is little scope to make up any shortfall.

Caron Bradshaw, CEO, CFG, commented:

“It is promising that Government recognises the impact that removing the zero rating will have on churches, however by failing to acknowledge the effect this will have on others in the sector they are leaving many charities in the lurch.

“Furthermore, while the Listed Places of Worship grant scheme is being ring-fenced, we have inherent concerns with having a grant scheme which could be subject to changes in the future.   The removal of the zero rating is yet another example of poorly thought out and clumsy policy making by government. It’s vital that they go further and simply exempt all charities from the measure.

“What is particularly worrying is that this is a permanent move – once a zero rating is gone it will be near impossible to reinstate.   For years charities have highlighted the problem of irrecoverable VAT and so it’s impossible to see this as anything other than a retrograde step, flying in the face of all charities have campaigned for and further contributing to an un-level playing field when it comes to VAT.”

Sir Stuart Etherington, CEO, NCVO, commented:

"We’ve been seeing a growing gulf between Government rhetoric and Government action and, like the cap on tax reliefs, this is a deeply concerning indication that charities have slipped down the list of priorities. It’s vital that the unique status of civil society and charities is recognised, preserved and protected. There are precedents for this kind of exemption and the need for a charity exemption, similar to what we are calling for here, has been recognized and applied in other areas of tax law.

“For many charities, such as museums, hospices and churches, the listed building is central to what they do. These charities sit at the heart of local communities to deliver services and, by utilising and maintaining the building they are supporting the UK’s heritage as well as beneficiaries.”

Notes to Editors

  1. CFG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 1,700 members, managing over £19bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information please visit the CFG website.
  2. The National Council for Voluntary Organisations (NCVO) is the umbrella body for the voluntary sector in England, with sister councils in Wales, Scotland and Northern Ireland. NCVO has over 8,300 members, ranging from large national bodies to community groups, volunteer centres, and development agencies working at a local level. With over 280,000 staff and over 13 million volunteers working for our members, we represent and support almost half the voluntary sector workforce.
  3. The responsewill be available on the CFG and NCVO websites later today. To receive an advance copy or for further information please contact: Charity Finance Group - Melora Jezierska This email address is being protected from spambots. You need JavaScript enabled to view it. or tel: 0207 250 8348. NCVO - Mandy Murphy This email address is being protected from spambots. You need JavaScript enabled to view it. or tel: 07714 243 942.
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