Clergy Expenses

Clergy expenses can be a source of stress, worry and disagreement - maybe even of arrest. It's in everyone's interests that genuine working expenses are paid happily, fully and promptly, but sometimes there can be differences of view, or maybe the PCC really can't manage to pay what the Vicar thinks he's entitled to or needs for his ministry.

In short, one needs to know the Inland Revenue rules, to understand them as clearly as you can and stick to them scrupulously. It's also worth knowing any guidance issued by the C of E and by your Diocese. The approach is not always totally intuative so make sure you get into the detail. A good clergy tax advisor may also help. I'm no expert and you don't want to rely on this blog in a court of law!

Clergy tax people include:

Tax Management for Clergy

Peter Chalke & RPP Taxation Services

In this Diocese you need to read, mark and learn and inwardly digest Finanical Aspects of Ministry: A Guide for Clergy and Parishes (2012) - the blue book.

Further information on income tax is contained in a booklet published by the Churches Main Committee The Taxation of Ministers of Religion and in a leaflet Tax on Service Benefit written by the Church Commissioners in the form of questions and answers.

The C of E booklet is The Parochial Expenses of the Clergy: A guide to their reimbursement (2006, with minor changes last made on 21st Nov 2011)

For example, did you know that it is considered reasonable for you to claim for one theological journal and one church newspaper?

Best practice would be to claim your actual expenses monthly. In our diocese a standard form is available. An Excel spreadsheet might help you.

If your parish pays a flat monthly rate, this might be taxable.

I imagine you will want to make use of your Heating, Lighting, Cleaning (& Gardening) tax allowance. This might be influenced by how you use your house and garden for ministry. (this might get a blogpost of its own sometime)

Although it might sound like something out of the MPs expenses scandal, I believe you can also pay a family member for any work that they do connected to your ministry which is more than a family member could reasonably be expected to do, and claim the tax back.

However you manage things, you need to find a reliable, reasonably accurate and efficient way of working out expenses and HLC and so on. There are all sorts of differnt ways you might do that. For example, will you keep a notebook in the car to record work related or personal milage and calculate the difference from the milometer? Or you could write all your business trips in your diary and use Google Maps. Many of your journies will be repeated. Will you have a special hospitality cupboard? How will you work out which phonecalls or paper or ink are church-related? For some things you may have to make do with a guestimate or a reasonable proportion of overall household expenses. It's worth keeping detailed receipts and notes.

Your expenses might depend on the way you minister and the best way forward there is probably a full and frank honest discussion with the treasurers / wardens or PCCs beforehand. You don't want to get into a situation where you present someone with a bill they refuse to pay. There is always going to be a degree of discretion and wisdom needed and it works best when there is a sense of trust.

Your post will also influence your expenses to a very considerable degree. For example, do you live next door to your church? Or do you drive miles between several different churches each day for morning and evening prayer? If you live in the centre of Oxford and enjoy cycling, your only milage might be your trips to the crem.

If you are the only staff member, your expenses will necessarily be much higher than if your administrator makes all the phonecalls, does all the photocopying and orders anything that is ever needed. Sometimes it is possible to be invoiced for an item and to pass the bill directly to the treasurer rather than bung it on your expenses.

Average clergy expenses in 2006/7 were £1,845.

Some clergy have a weakness for buying books. Remember that all Christian books are not a legitimate expense. Only those which are essential for your work. I'm told the Revenue tend to take a narrow view of this. I believe it is accepted that you need a Bible and a copy of Common Worship. It might be harder to argue that you need 4 commentaries on each book of the Bible and volumes on every topic that might one day come up.

Hospitality is another vexed area. Perhaps that merits a post of its own.

It is very kind of you not to claim all your real expenses, but remember that this might queer the pitch for your other colleages or successors. It is no bad thing for the PCC to know how much things really cost. And, of course, once you have claimed your expenses it is entirely up to you how much you give to the parish as a charitable donation on which Gift Aid can be reclaimed.

If the PCC can't afford to pay your expenses and refuses to do so, you can still get the tax back on expenses which you involuntarly pay yourself.