The VAT position about building work relating to churches is as follows:
The following are zero-rated (so that the builder/supplier doing the work should not charge VAT).
Construction of a new church
This is subject to the issue of the appropriate certificate to the builder. A church building is regarded as new for this purpose if:
- there was no building on the area of construction before OR
- the previous building was demolished to ground level OR
- all that remains of the previous building is a single facade or when on a corner site, a double facade. In both cases, retention of the facades must be a condition of the planning consent.
Construction of a new annex to a church
- the annex is capable of functioning independently from the existing building
- the main access to the annex is not through the existing building or converse.
In cases where what is constructed does not meet the conditions above, it will not be zero-rated for VAT purposes and is likely to be an extension to the building. As such, it would therefore be eligible for the Listed Places of Worship Grant Scheme.
Construction of a new church hall
This is subject to the issue of the appropriate certificate, provided that the hall is to be used for the provision of social or recreational facilities for the good of the local community.
Where the work is in the course of construction or re-construction which will itself be zero rated, and the demolition is down to ground level (but leaving foundations or leaving a single facade wall).
Repairs, maintenance and alterations
These are standard rated but in the case of listed buildings mainly used for public worship the VAT can be recovered under the Listed Places of Worship Grant Scheme. The Listed Places of Worship Grant Scheme makes grants towards the VAT incurred in making repairs and carrying out necessary alterations to listed buildings mainly used for public worship. The grant is paid to you after the work has been done and paid for. You need to retain original copies of all receipted repair invoices. A parallel scheme deals with public monuments and memorials.
Details of the scheme are available on a helpline: 0845 601 5945
There is also a Memorials grant scheme.
Sarah Williams at Harris & Harris can be contacted for advice in relation to listed/non-listed building status.
Aids for people with disabilities on church premises
The following are zero rated:
- the supply of the service of the construction of ramps and widening of doorways and passages in any building for the purpose of facilitating a disabled person’s entry and movement therein (see Public Notice 701/7 “VAT Reliefs for Disabled People” Chapter 6)
- the supply of the service of providing, extending or adapting a bathroom or toilet for use by a disabled person in a building used mainly for charitable purposes (see Public Notice 701/7 “VAT Reliefs for Disabled People” Chapter 6)
Energy savings materials
The following carries reduced rate relief: the installation of certain energy savings materials is subject to the reduced rate of 5% when installed in buildings used for a relevant charitable purpose (see Public Notice 708/6 “Energy-Saving Materials” Chapter 2).
Where works are zero rated, the builder/supplier will require an eligibility certificate from the charity. Please see the website. HMRC VAT Helpline: 0300 200 3700.