Many local churches employ people; organists, caretakers, children or youth workers, outreach or community workers, vergers and many others.
Often ‘volunteers’ who receive a benefit or payment for the duties they undertake might actually be ‘employed’ in the eyes of the law and tax authorities and this presents considerable implications.
A guide has been drafted to assist parishes with this area:PAYE guide March 2017
HMRC provides definitive guidance on all aspects of employment: https://www.gov.uk/employing-staff
Churches are responsible for the payment of certain expenses incurred by those serving in ministry within their area.
The Clergy Parochial Expenses guide can be found: http://www.churchinwales.org.uk/structure/representative-body/finance/parochial-expenses/
Accounts and Budgeting
The Representative Body of Church in Wales offers a series of useful templates and spreadsheets to help your church prepare annual accounts and a yearly budget. These are designed to replicate the format of the Annual Financial Return and to be compliant with guidance issued by the Charity Commission. http://www.churchinwales.org.uk/structure/representative-body/finance/parish-accounting/
PCCs with annual gross income over £100,000 are required to register with the Charity Commission (If your normal income is £80,000 or less, but exceptionally you exceeded the £100,000 threshold last year due to a grant, legacy or particular building campaign, you can apply for a written determination that you need not register.)
Details of how to register and further information can be found:
VAT – Zero-rated or Reduced-rated VAT
(a) Listed Places of Worship – Grant Scheme
From 1 April 2004 the Chancellor of the Exchequer agreed to a return in grant aid of all VAT on eligible repairs and maintenance work carried out after 1 April 2004.
Application forms for grant assistance, together with detailed information about the scheme can be obtained from www.lpwscheme.org.uk
The Heritage Lottery Fund is to end its £25m Grants for Places of Worship fund in 2018: grants for the maintenance of church buildings will instead come out of its overall heritage programme. The last deadline for new project submissions will be August 2017 for decisions in November / December 2017.
HMRC allow certain building works to be zero-rated, providing the building works are eligible and the building is used for a “relevant charitable purpose”.
Your VAT-registered builder should give you an invoice showing where the exemption has occurred. They will need a certificate from you stating that you are a charity, and the building is used for charitable purposes. Please note that the rules are complex and before issuing a certificate you should get copies of the relevant notices from HM Customs & Excise.
- Note 708 July 2002 (VAT – Buildings and Construction)
- Notice 701/7 August 2002 (VAT Reliefs for disabled people)
For further information: https://www.gov.uk/vat-charities/what-qualifies-for-relief