The essential guide to Self Assessment tax returns for ministers of religion
This guide provides basic information about completing Self Assessment tax returns if you’re a minister of religion. That could mean you’re a vicar, reverend, priest, rabbi, imam or other religious leader or person acting on behalf of a faith or church, mosque, synagogue, temple, etc.
You’ll be able to find out about:
● the SA100 tax return and SA102M supplementary page
● tax expenses that you can claim as a minister of religion
● how to complete and file your minister of religion tax return
● further sources of information and guidance.
Reporting taxable income as a minister of religion
When reporting taxable income to UK tax authority HMRC, ministers of religion must complete the SA100, the main Self-Assessment tax return, which is eight pages long. The most relevant income sources that need to be given are likely to be investment and pension income, but there could be other taxable sources.
On page 4 of the SA100, reliefs can be claimed for pension contributions that are not deducted from stipend (ie fixed regular sum paid as a salary or expenses to ministers of religion) through PAYE, as well as Gift Aid payments and Blind Person’s Allowance (if relevant).
Ministers of religion must also complete the SA102M supplementary page to report their income and expenses as a minister. Taxable income can include:
● salary, fees, commissions, overtime, bonuses and other contractual payments, even if you’ve paid some of it to a charity
● fees and offerings for performing your minister duties
● gifts and grants you receive because you’re a minister
● Statutory Sick, Maternity, Paternity or Adoption Pay paid by an employer.
HMRC uses the information you provide within your tax return to work out how much tax you owe. You’ll need to fill in separate SA102Ms for each ministerial post held in the tax year (ie 6 April until the following 5 April).
Need to know! There is an alternative four-page short Self Assessment tax return (the SA200) for use in less complex cases, which may better suit retired ministers. However, you should only use it if told to do so by HMRC.
Paper or online Self Assessment tax return?
Very few Self Assessment taxpayers (about 4.4%) continue to complete and file paper Self Assessment tax returns. Even if you’re experienced, filling them in is a tedious, time-consuming task, where mistakes can be more likely, and there are no prompts to help you.
Filling in and filing your minister of religion tax return online can save you lots of time and effort, with mistakes less likely. However, you cannot file your tax return online via the HMRC website – you must use commercial software. That’s likely to only cost about £50 a tax year, which can be a price well worth paying for the benefits and added convenience that it brings.
Need to know! Automatic prompts from the software tell you what information you need to enter and where it should go, which provides additional peace of mind, while helping to ensure that you don’t pay too much tax.
When must ministers of religion submit their tax return?
● If you file your minister of religion tax return online, you must do so before midnight on the 31 January, following the end of the tax year to which the return refers. The UK tax year always ends on 5 April.
● It can be filed any time after 5 April, you do not have to wait until 31 January. In fact, your life will probably be much less stressful if you complete and file your minister of religion tax return much sooner.
● Another reason to not file a paper tax return is the filing deadline is earlier. Paper tax returns must be filed before midnight on 31 October following the end of the tax year (5 April) to which the tax return refers.
● If you file your tax return after the deadline, immediately you’ll have to pay a £100 fine. After three months, another fine is payable.
How to work out your taxable income as a Minister of Religion
When completing your Self Assessment tax return, you can find out what you’ve earned and the tax you’ve paid from your P45 if you’ve left employment (eg if you’ve recently retired) or from your P60 if you’re still employed.
Other taxable income ministers receive that they will need to summarise in their SA100 if it is subject to tax can include casual fees, pension payments and investment income.
● If a minister receives taxable income from rented out property or land, they will also need to file an SA105 supplementary page, summarising taxable income and expenses claimed.
● If a minister receives taxable capital gains within a tax year, for example, after selling a property that is not their main home, they will also need to complete a SA108 form and submit it with their SA100 and SA102M.
Need to know! If you received any benefits or non-exempt expenses payments, you’ll need to include them in your SA102M. This can include rent and utilities you’re reimbursed. Your church/mosque/synagogue/temple will provide you with details via form P11D (ie a tax form filed by employers to report benefits provided and expense payments made to employees that are not put through the business/company payroll).
What allowable expenses can Ministers of Religion claim?
Allowable expenses you may be able to claim include:
• private rent not paid by the church/mosque/synagogue/temple
• private heating, lighting, repairs and maintenance costs
• replacing robes worn for service
• new ceremonial items
• ceremonial food and drink
• religious minister training
• subscriptions that enable you provide a better service
• journeys from one place of work to another
• secretarial assistance for your duties
• reasonable entertainment costs for visiting clergy members
• postage and stationery.
Need to know! Separating expenses into a ‘self-paid’ and ‘reimbursed’ list will make completing your Self Assessment tax return much easier, which will be even quicker and simpler if you use tax return software.
How much rent can Ministers of Religion claim?
The maximum amount of rent you can claim as a minister is 25% of the total cost. You may work in a home office, for example, or perform other duties in your home, for which you can claim allowable expenses to reduce your tax bill.
You’ll need a reliable method of working out what proportion or percentage of your total rent you can claim, if not paid by a church/mosque/synagogue/temple. This should be based on the total number of rooms. So, for example, if you live in a house with six rooms and use one room for your ministerial work (ie admin, study, research, etc) eight hours a day, you charge for a sixth of your total rent divided by three.
Total yearly rent: £1,500 x 12 = £18,000
Divided by number of rooms: £18,000 divided by 6 = £3,000
Used for eight hours a day: £3,000 divided by 3 = £1,000
Allowable expenses claim for rent = £1,000 a year.
Other domestic costs for electricity and other things are allowable and can be added, claimed on the same proportional basis, which would further reduce your tax bill. But as stated, you cannot claim more than 25% of your total rental costs for rent as an allowable expense.
What is the service benefit cap?
If you receive payments, services or goods on which tax has not been charged, these are “benefits in kind”. If they relate specifically to your accommodation, they’re called service benefits. They can include tax-free reimbursement for heating, lighting, cleaning and gardening costs, or repairs, maintenance, decoration, furnishings or domestic appliances that were your responsibility, but which were paid for or provided by someone else.
If the income from the post where a service benefit came is less than £8,500 within the tax year, no tax is payable. This is the service benefit cap. If it is more than £8,500, tax is payable. It will be charged at the total value of the service benefit or 10% of your net earnings from the post, whichever is lowest. You’re responsible for doing this calculation when filling out your SA102M.
Do ministers need to pay someone to fill in their tax return?
Depends on how complex your tax affairs are – in most cases not. If your tax affairs are relatively straight-forward, you should be able to fill in your own tax return and supplementary pages (most people do it in a few hours, if all of the necessary figures are to hand).
Using Tax return filing software makes the job much simpler and quicker, with mistakes much less likely. If your tax affairs are more complex (or they are in a particular tax year), paying for tailored tax advice can be worthwhile. Not only can it prevent overpayment of tax, but it can also ensure that you comply with requirements.
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