NEW Ministers of Religion will need to submit a self-assessment
tax return every year to HM Revenue and Customs. This might be a
new experience for people who were formerly employees.
The return must include details of all taxable income and
benefits. A tax year runs from 6 April to 5 April, with a deadline
for filing of 31 October for paper returns, and 31 January for
online submissions (but see below).
There is a less publicised deadline of 30 December. If you file
online before this date and owe tax of less than £3000 on top of
any PAYE deductions, tax may be collected through your PAYE coding
notice over 12 months, starting in April 2015. This is a useful
mechanism for spreading payments over time.
You are currently unable to file your tax return online at the
HMRC website. Therefore, the three choices open to a Minister of
- file a paper tax return;
- file using specialist tax software;
- instruct a tax adviser to submit your tax return.
To file your return, you will need details of all your sources
of income. This includes, but is not limited to, income from your
P60, benefits (such as HLC benefit) from your P11D*, bank interest,
dividends, and rental income if applicable. New ordinands may well
need to report their student-loan figures, too, on the Minister of
Religion tax-return pages.
Any ministerial expenses you have incurred in your ministry
which have not already been reimbursed by the parish can also be
entered. These costs may include:
- travel costs;
- printing, postage and stationery;
- telephone and broadband;
- office equipment;
- books, and Church Times sub;
- secretarial expenses;
- heating, lighting, cleaning and gardening.*
Service benefits, i.e. things that could be deemed payment in
kind, are taxable. If you receive help with heating, lighting,
cleaning, and gardening, this will be the "HLC" you see on your
payslip. You would also need to calculate your service benefit cap,
to account for the cap on your taxable benefits. However, given
that you may claim up to 25 per cent of the relevant cost, it is a
tax-saving measure as opposed to a restriction. If your annual
stipend is less than £8,500 per annum there will be no tax
If you are in any doubt, it is best to seek professional
Once you have finished your tax return, if you owe tax, payment
may be made at any time, ensuring you meet the deadline of 31
January, unless you opt to have the liability collected through
your tax-coding notice.
Once HMRC have received your tax return, they will often revise
your tax-coding notice, and send out a statement of your account.
You can then put your feet up, and look forward to the next tax
*Changes to Heating, Lighting, Cleaning and Gardening
Benefit (Church of England): The service benefit received relating
to heating, lighting, cleaning and gardening, used to be reported
annually on your P60. Last year, for C of E ministers, the Church
Commissioners began removing this from P60s. The figure is now
reported on a form named P11D, which will therefore be required
when preparing self-assessment tax returns.
Five basic errors to avoid on your tax
(based on our experience with clients)
Mistaking the gross amount for the net amount on the interest-
Not using the "notes" section to explain material variances year
on year. This can be a useful mitigation technique in helping to
avoid an HMRC enquiry.
Failing to include underpayment restrictions as per your coding
notice, on your tax return.
Entering non-taxable income such as interest from ISAs. This
should not be on your tax return.
Not realising that you can repair your tax return if you later
discover a mistake. You have until 31 January 2015 to repair your
2012/13 self assessment return.
Child tax credits
If you are making Gift Aid donations, remember to declare these
to HMRC for child-tax-credit purposes. A Gift Aid donation of £100
will be grossed up to £125, and it is the latter amount that will
offset against your income for tax-credit purposes. This reduction
in income, reported to HMRC, will usually increase the tax credits
you receive (so you can give more away).
Clergy commonly let out their home to tenants, as they reside in
church accommodation. Big changes were introduced for the
tax-return period ended 5 April 2014 affecting those letting
unfurnished and partly furnished properties. Up to 5 April 2013,
clergy who let unfurnished and partly furnished properties were
able to claim a renewals allowance to replace free-standing movable
assets such as furniture, white goods, and so forth.
Landlords of furnished properties will now have to claim for the
wear-and-tear allowance; there is no longer a choice to opt for the
original renewals allowance. Wear-and-tear allowance is designed to
cover movable items such as fridges, washing machines, beds, sofas,
Although the renewals allowance is still in existence, it serves
only for the replacement of small tools, such as hammers, utensils,
etc. The difference, however, would be if, for instance, a fridge
was an integral part of a fitted kitchen, and thus part of the
entirety of the property. The like-for-like replacement here would
be classified as a repair cost, and therefore claimable against
Seven dates for the diary
31 July 2014
- deadline to renew tax credits if applicable to you.
5 October 2014
- latest date to register for self-assessment for new
31 October 2014
- deadline to file your self-assessment tax return if you opt
for paper filing.
30 December 2014
- deadline to file your tax return online if you wish to add
your self-assessment tax liability to a future tax code.
31 January 2015
- online filing and payment deadline for your self-assessment
28 February 2015
- if you do not pay your tax by 31 January 2015, this is the
deadline to avoid paying a penalty of five per cent of the tax
30 April 2015
- if you miss the online filing deadline, this is the deadline
for filing your self-assessment tax return to avoid the £10-a-day
Michael Wright is clergy tax adviser for Holdings
Ecclesiastical Limited, trading as Clergy Tax EU: