Are there any tax-free allowances?

(1) Clergy

Under arrangements agreed with the Revenue, part of your stipend may be paid free of tax and national insurance in reimbursement of heating, lighting, cleaning and garden upkeep costs. The following conditions must be met:

• You must occupy, rent-free, an official house provided by the Church of England (or a charity) for duties which are full-time;

• You must have incurred the costs only on heating, lighting, cleaning or garden upkeep in those parts of the property which are used for official purposes and/or occupied by you or your family;

• You must receive eligible funds (i.e. non-statutory grants) paid through this office;

• You must complete a Return of Expenditure annually. (If no Return is received by September, any existing tax-free payments have to cease. If no Return is received by the following March, any relief for that year is lost entirely.)

The reimbursement of these expenses is not a payment in addition to your stipend. It is simply a reclassification of part of your stipend as tax-free rather than taxable.

When you take up a new appointment, we seek a reasonable estimate of the costs at your official house; we can then make provisional tax-free payments on that basis.

Once you know your actual expenditure and enter it on a Return which we send you during the next financial year, we then make an appropriate adjustment for any under - or - over reimbursement. In practice, an under-reimbursement is adjusted immediately, whilst an over reimbursement is corrected by switching the amount due from the tax-free to the taxable element of your stipend in equal monthly instalments over the remaining payments of the tax  year. This procedure means that your tax-free payments may fluctuate whilst the adjustment is being made.

If for any reason, we are unable to reimburse part or all of your costs, you should write to the Revenue to request a "study allowance" (normally only one quarter of your under-reimbursed costs).

(2) Deaconesses and Licensed Layorkers

Unfortunately, the arrangements described above can not apply automatically to deaconesses and licensed layworkers. In some cases, full reimbursement (as for the clergy) is permitted, whilst in others only a reduced rate of reimbursement (amounting to 25% of the total claim) is payable. In each case, the Revenue have to consider the relationship of duties to the particular accommodation. They then advise us of their decision, so that we can implement either full reimbursement or reduced reimbursement as appropriate.

A copy of the full Rules relating to this scheme is available from us on request.