Diocese of Truro criticises VAT increase

Plans to charge churches VAT on alterations are "a blow", the Diocese of Truro has said.

Approved alterations to listed buildings, many of which are churches, will be subject to 20% VAT instead of being zero-rated from October.

Diocesan Secretary Linda Barley said: "It's a big blow and we didn't expect it at all."

The government said the change "removes a perverse incentive to change listed buildings rather than repair them".

'Difficult position'

The VAT change was announced by Chancellor George Osborne in the Budget on 21 March.

It means that VAT charged on alterations on listed buildings will be brought into line with VAT on repairs and maintenance, which is already subject to the 20% standard rate.

The Department for Culture, Media and Sport said it was expanding the existing Listed Places of Worship Grant Scheme, which refunds the VAT on repairs and maintenance work, so that this includes approved alterations to listed buildings.

But Ms Barley said: "We have no idea what money will be put in so we doubt if it will compensate.

"I think congregations are going to find themselves in a very difficult position."

The government said: "The change makes the VAT rules simpler for businesses to understand and for HM Revenue & Customs to administer and reduces the scope for error and non-compliance."