Government ends church VAT repairs scheme, raising concerns for rural churches

/in , /by

Rural church buildings face new challenges following changes to repairs funding and VAT

On 22 January 2026, the UK Government confirmed the end of the Listed Places of Worship Grant Scheme, which for more than 20 years has enabled churches to reclaim VAT on repairs and alterations. In its place, the Government has announced a £230 million funding package intended to protect and preserve heritage buildings, including listed places of worship.

This new capital funding has been welcomed, but it comes with a significant change. Under the new arrangements, churches will now have to pay VAT on repairs in full. This means that local congregations and volunteers will not only need to raise funds for essential work such as roof repairs, stonework or heating systems, but will also need to cover an additional 20% tax cost.

The National Churches Trust has responded by welcoming the principle of new funding, while expressing serious concern about the loss of VAT relief. Sir Philip Rutnam, Chair of the Trust, noted that churches depend overwhelmingly on volunteers and stressed that any new scheme must be simple, accessible and predictable if it is to work well in practice.

He also highlighted the unfairness of the new situation, pointing out that museums and galleries offering free admission do not have to pay VAT on repairs, while churches now will. The Trust has called on the Government to reconsider this approach and not place additional tax burdens on local communities already working hard to care for historic buildings.

For rural churches, the impact of these changes may be particularly acute. Many serve small populations, have limited fundraising capacity, and care for buildings that are both listed and central to community life. Delays to essential repairs risk not only the future of worship spaces, but also the loss of buildings that host social events, support services and local gatherings.

At The Arthur Rank Centre, we are mindful of the challenges this presents for rural churches and chapels. We will continue to monitor developments closely, share updates as more is known about the new funding scheme, and work alongside partners who are advocating for fair and sustainable support for the care of rural church buildings.

You can read here the National Churches Trust’s full response and find further information about their campaign.