British Government to take 20% of church collections in tax

A story has surfaced (via eChurch blog) that some small Brethren churches were being “denied charitable status” on the grounds that the “2006 Act removed the presumption of public benefit from certain classes of charity including religious charities”.  Another small church is having its charitable status “revoked”.  But this rather hides what is happening here.

This means that these churches will now be treated as businesses for tax purposes.  This in turn means that their income will be subject to corporation tax at 20%.  It means that David Cameron will be taking one pound out of every five from the collection plate of these tiny west-country churches.

That’s quite a proposal.  It has, as far as I can tell, attracted little press comment.

Julian Brazier MP comments here:

In particular, they feel that the Commission’s decision runs counter to the assurances given by both Government Ministers and the Commission itself, that established religions should not find themselves denied charitable status as a result of the provisions of the 2006 Act.

Some of us knew what would happen, even then.  This Is Cornwall comments:

The Westcountry branch of   an evangelical Christian movement is to become a test case for legislation which could strip thousands of religious groups of their charitable status.

Preston Down Trust, which runs meeting halls for the   non-conformist Exclusive Brethren in Torquay, Paignton and Newton Abbot, is fighting exclusion under the Charities Act. …

Colin Hart, director of the Christian Institute, said it was “alarming” the commission was “getting involved in assessing whether they like a particular religious belief, whether they think it has a benefit or disbenefit”.

The Charities Commission has cynically “welcomed” the “chance to clarify the law” by putting this tiny and harmless group through the misery of a drawn-out court case.

Another report is here.


10 thoughts on “British Government to take 20% of church collections in tax

  1. The Exclusive Brethren are NOT a tiny, harmless group. Over many years now they have caused untold grief, heartbreak and even suicides. Marriages broken, families split, churches locking the door on people wanting to visit. Security keypad entry systems, changes of theology depending on any financial gain they can make.

    They lobbied for the retention of paper VAT returns as they did not allow computers. Now they do have computers, otherwise their schools were under threat. Basically they have wasted UK Government time. Please do not confuse these people with the harmless and evangelical Plymouth Brethren as many MPs seem to be doing.

  2. I sense that you have had a bad experience somewhere, and you have my sympathy. No church should operate in a cult-like manner. Some parts of the Brethren movement, or persons from that background, have certainly acted in a manner which is not acceptable. Let us be clear that using the name of Christ as a means to manipulate, to exact money or services from those who honour Him is blasphemous. I had some experience of that myself, fortunately only briefly.

    But I would suggest that, if groups are really cults injuring people, then they should be punished for that. I don’t think that we should allow people to be harassed through the charities system, just because we do not like them. It’s a different issue. There is no practical way to use the charities system to discriminate here, other than by setting up a court of High Commission or the like. Such a body, placed in charge of all the churches, will undoubtedly be staffed by the worst of men.

  3. I don’t think it is true that these organisations will have to pay corporation tax. Loss of charitable status just means that the members will have to pay income tax on all their personal income like anyone else, and then they can donate money to the church out of their take-home salary, not out of their pre-tax salary. In other words, they can’t get personal income tax relief on their donations.

    Nor is it true that the Charities Commission is getting involved in judging a church’s beliefs. It is getting involved in judging its actions, which are what determine its entitlement to charitable status. The law doesn’t care about what they believe; only about what they do. Just like the sheep and the goats. They were judged by their deeds, not their beliefs.

  4. Always willing to learn different: but I see that HMRC discuss charities and corporation tax here and here.

    Generally, limited companies and some unincorporated organisations are liable for Corporation Tax on their taxable profits. Some charities may also be liable for Corporation Tax….

    Activities carried out by charities are not subject to Corporation Tax requirements, provided any income generated from those activities arises from or is applied to charitable purposes. This is known as being ‘exempt’ from Corporation Tax deadlines and requirements.

    Exempt activities of charities include:
    •trading profits generated where those profits arise from and are applied to charitable purposes
    •profits from any fundraising events provided that those profits are applied to charitable purposes

    HM Revenue & Customs (HMRC) defines charitable purposes as carrying out the primary purpose of the charity and/or directly serving the beneficiaries of the charity.

    Generally, if you meet the various HMRC requirements, your charity is not liable for Corporation Tax and you don’t need to complete a Company Tax Return.

    I read this as telling us that, if the church is not a charity, then it is treated as a commercial enterprise and it will need to pay 20% corporation tax on all donations.

    As for church members, they, like you and I, will continue to pay 20% income tax (PAYE) and 11% employees National Insurance on all their earnings above the lower earnings threshold, regardless of whether their donation is to a charity or not.

    However the point is that the recipient can reclaim that 31% tax through gift aid, if they are a charity. That is to say, they can increase the amount they receive by nearly half. That is not a small change from the point of view of most charitable organisations, and certainly not for such small groups as these.

    There are some ways in which people get personal tax relief for making donations, it is true. For instance, if the donation is made to a charity, and the donor earns enough to pay 40% tax, he will be able to obtain relief on the marginal rate. This is an incentive to rich people to be philanthropic. I seem to recall that you get something these days under self-assessment as well, even as a basic tax payer, but can’t remember what. But neither of these is really the point, is it?

    So the effect of denying a small group charitable status is that on the one hand their income is immediately cut by a third, because they can’t use gift aid; and what they do collect is then subject to corporation tax at 20%.

    These are very heavy penalties indeed.

    The second point is a curious one, or so it seems to me. The charities commission is evaluating whether these small churches should, or should not, be allowed charitable status. They always had charitable status. They always were charitable bodies. Now they are being put through court cases, and “investigations”, because of a law change which put the charities commission in the position of deciding whether the existence of any given Christian group benefits the public or not. That is not something that we want happening in a free country. There is no practical difference between this, that I can see, and passing a law that privileges groups that the establishment happens to like. I’m afraid that it seems to me rather like special pleading to do all this, and then start talking about “the laws says …” and “it is their actions that will be evaluated, not their beliefs”. If they were not a “religious body”, they would not be undergoing this harassment, as we all know. The law was changed precisely to make such harassment possible.

    You say that the commission is only “judging its actions” etc. Perhaps you would reference this statement?

  5. This is an old post, and so naturally I am interested to see that it has received three comments on the same day. I presume someone has linked here? Would one of you be kind enough to point me to wherever it is? Many thanks!

    PS: Mind the comments policy. 🙂

  6. If you have a few minutes spare Roger, I would advise you to read the ‘In Memoriam’ pages on the website you have found and then consider that only a few weeks ago, most people in the UK thought Jimmy Savile was a good bloke.

    Just why does it take so long for a damaged minority to get their voices heard by the general public ?

    The stories of manipulation and cult-like behaviour are awful and on-going.

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