When a landlord rents space to a tenant, the landlord can exercise an 'option to tax' the transaction at the standard rate of VAT. Whilst this may be useful for the landlord, where a church is the tenant it is unlikely that the church will be able to recover any of the VAT, in effect raising the cost of renting property by some 20%. This paper explains the problem from a church perspective and sets out a solution.
Topics included:
- The potential problem of VAT
- Recovering past VAT charges
- Certification of relevant charitable purpose
- Where there are services alongside of the rented space
This free briefing paper has been prepared using extracts from ‘VAT for Churches – a detailed guide’, which is available for purchase.
January 2026