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Ecclesiastical moves to reduce impact of VAT increase on churches

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Thousands of churches across the UK will be spared some of the pain of January’s VAT increase thanks to a decision by the country’s biggest insurer of churches, Ecclesiastical.

In order to help already hard-pressed Church of England church budgets cope, Ecclesiastical has announced that with effect from 4 January 2011 the company is proposing to increase sums insured for all church buildings currently in use for worship to reflect the new level of VAT without any charge.

For the average Church of England church, Ecclesiastical’s offer will mean a saving of £30-£60 in 2011.

Ecclesiastical’s Direct Insurance Director John Coates said: “At Ecclesiastical we’re very conscious of the difficult financial position many parishes find themselves in today. Rising insurance costs triggered by the VAT increase would just add to the pressure. While we can’t make guarantees for the longer term, for 2011 Ecclesiastical can absorb that cost and not pass it on to individual churches.

“I hope this move will be of real, tangible benefit to parishes and the wider Church of England.  I would however stress that this action in no way sets a precedent should the Government make further increases in VAT or similar taxes that impact upon church insurances.”

VAT does not apply for churches in the Channel Islands. Those churches that have elected to remove VAT from the formula used for calculating the value of their insurance cover will also not experience any increase in cost.

The Government also announced that insurance premium tax will also rise from 5% to 6% on 4 January.

Source : Ecclesiastical Press Release

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