VAT announcement safeguards at-risk church projects

Church alteration projects that were put on hold after the announcement of VAT changes in the last Budget have been thrown a lifeline from HMRC.

The tax office announced on Thursday that transitional arrangements for zero-rated VAT on alterations to cathedral and church buildings would be extended to cover all schemes which had already applied for approval from Church authorities prior to the Budget.

Chancellor George Osborne announced in his Budget that VAT would be charged on alterations to Grade I listed buildings.

The change met with huge objections from the Church of England - its churches account for 45 per cent of the Grade I listed buildings in England.

Wakefield Cathedral and St Nicholas Cathedral in Newcastle warned that their major renovation projects could be brought to a halt by the change.

The Church of England failed to persuade the Chancellor to maintain zero-rated VAT on alterations, but it did manage to secure an additional £30 million a year in funding towards alterations and repairs.

HMRC also announced that the transitional period would be extended until 30 September 2015, allowing qualifying projects to benefit from zero rating for a further three and a half years.

Anne Sloman, Chair of the Church Buildings Council said: "We are delighted that alterations to church buildings which had already applied for a faculty that have been on hold since the Budget can now proceed, and we hope as many as possible will now be able to do so without further delay."