Why I went to HM Treasury

On Tuesday, in glorious sunshine, I went to the Treasury to present a case for changes to Insurance Premium Tax (IPT) for Listed Places of Worship (LPOWs) and charities. I spent an hour with senior policy advisers, who listened carefully and courteously, asked questions, and made notes. 

 IPT was introduced in 1994 - a levy of 2.5% on most insurance policies. I remember a couple of church treasurers grumbling about it, but it appeared in church accounts as part of the insurance cost so most people were unaware of the extra cost we were having to pay. The rate increased in 1997, 1999 and 2011, and now stands at 6%. Church insurance premiums have risen during that time too, so IPT is now a significant proportion of a significant expense.

Statistics from the Church of England website, especially here and here, tell us the following:

• 45% of Grade 1 listed buildings are churches
• There are 14,500 LPOWs of which 12,500 are in the care of the Church of England
• These are a key part of our heritage, both nationally and locally
• They are financed and supported largely by local volunteers
• The average subscriber (committed regular giver) gives £10.70 pw (£556.40 pa) to the church (2011 figure)

There is a significant economic and social (as well as spiritual) value provided by churches:

• 35-50m annual visits to churches
• 85% of the population visits a church at least once per year
• Cathedral visits alone are worth an estimated £91m to the local economy
• Cathedrals alone support 2600 jobs
• £110m pa is spent on repairs to listed churches - a significant economic input
• 70% of this is raised by congregations and their local community
• Churchgoers give 278.4m hours pa in voluntary service to the wider community outside the church
• This is worth £1.75bn if costed at the minimum wage level of £6.31/hour
• Churches give £51.7m pa to other charities
• Churches provide foodbanks, Street Pastors, and many other projects for social capital, social cohesion and welfare

Our priority is people and communities. Stewardship of our wonderful collection of buildings is vital, but secondary to the needs of people. As fund-raising becomes more challenging, we find people are still inspired to give generously to the needs of others - but fewer people want their gifts to be taken up by overheads. Which brings us to insurance.

• Insurance is part of the stewardship of our national and local heritage.
• High-value buildings and the need for specialist craftsmanship are reflected in high insurance costs.
• Wider issues in society have significantly increased risks to churches such as arson and the theft of lead
• Every church building is unique, and its insurance premium is tailored accordingly
• The local church building is a given; its scale and costliness may not reflect current levels of prosperity or support, making the tax unfair

Here are some actual current examples of the IPT paid on insurance policies by specific cathedrals and churches. The names are excluded for reasons of commercial confidentiality:

• Major Cathedral                                  £4788
• Small Cathedral                                 £2031
• Large town church, Grade 1            £1700
• Large urban church, Grade 2*          £824
• Suburban church, Grade 2                £434
• Village church, Grade 1                      £253
• Small rural church, Grade 2                £61

These figures are the insurance premium tax paid, not the cost of the policy

I don't have access to national figures, but supposing an average of £350 is paid in IPT per LPOW (my estimate):

• The gross IPT burden on LPOWs is £5.075m
• The Church of England pays most of this - £4.375m
• Cathedrals are paying in the region of £100,000pa
• Even if my estimate is too high, the amounts are significant to the Church
• Yet they represent a tiny fraction of IPT revenue (2013 = over £3bn)

Who pays? The responsibility in the Church of England is entirely local. The Parochial Church Council has to find the money. It is an added expense for voluntary donors and it takes away funds which could be used for our prime purpose - people - or for the repair and other costs associated with our heritage buildings.

There are precedents for tax relief or exemption for LPOWs:

• The Listed Places of Worship Grant Scheme gives VAT relief on repairs within certain constraints
• The Gift Aid scheme enables churches & charities to reclaim tax paid on donations
• Both schemes are significant and enormously appreciated
• Both schemes encourage charitable giving
• Taxation of LPOWs through IPT runs counter to the spirit of these schemes

Government policy includes 'Promoting social action: encouraging and enabling people to play a more active part in society' (the 'Big Society'). Tax relief/exemption encourages voluntary giving and frees up funds and goodwill for charitable purposes. Exemption from IPT will therefore further Government policy and provide value for money.

I did not overlook other charities when presenting my case. I would like to see IPT exemption for the charity sector as a whole (including non-listed churches, of course). However, LPOWs do provide a special case - and of course, I know more about this area than about charities in general.

My understanding is that the Treasury will carry out further research, not least into the cost of any policy change and how that cost could be met from other sources. The methodology would also have to be worked out. Any decision to implement a change rests with the minister responsible, and would take time to see the light of day. 

What outcome would I like to see? In order of preference:

• Ideally, exemption from IPT for LPOWs & charities on building insurance costs; or failing that
• A ceiling of (say) £100 pa on the IPT paid on building insurance; or failing that
• A reduction in the IPT rate to (say) 1%

Finally, how can you help?

• Write to your MP to raise his/her awareness and concern about the issue - this is the most effective thing you can do
• Sign the e-petition 
• Inform and encourage others to join the campaign

And of course, I commend this to your prayers. Thank you.

Fr Christopher

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