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Tax for Catholic priests

Does a Catholic priest with minimal salary have to submit a tax return?

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Dearly Beloved,

My local parish has 3 priests from Nigeria, who naturally know nothing of the UK tax system.  They've not received much guidance from the Diocese and so asked me.

I have researched and found in the NI manuals that they are treated as Office holders for tax, but self-employed for NIC.  A call to HMRC told me they have to do a return, using the ministers of religion pages, regardless of their income which is well below the personal allowance, but I'm not convinced.  The PAYE manual refers to a DPNI PAYE scheme but there will be no liability so I'm not sure if that's necessary.

They receive around £400 per month which comes out of the collection, accomodation at the prebytery house (connected to the church), expenses for food and travel so while they get paid very little, there's not much that isn't already covered.  A proportion of that £400 is donated back to the parish they serve.

I found a tax case Daly v CIR which, while old and in Scotland, suggests the food/household expenses are not assessable, and I believe accomodation is exempt.  

So to go back to my question, is a return truly needed, and if so, how much goes on it?  And do they each need to set up a DPNI scheme?  And one final one, are they liable to class 2 NIC?

Thank you

Replies (12)

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By carnmores
21st Aug 2020 21:18

Ah yes are they employed by God or Co E or the Pope! I suspect that they do and should use the stated pages. Long ago i set up a site for ministers of religion...

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Replying to carnmores:
Lone Wolf
By Lone_Wolf
24th Aug 2020 09:38

carnmores wrote:
Long ago i set up a site for ministers of religion...

You set up a prison? How'd you end up in accounting after that?
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By Anonymous.
21st Aug 2020 21:47

Remember the special rate that applies to the wages of sin.

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Replying to Anonymous.:
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By Jfg
22nd Aug 2020 11:12

LOL, very good....

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By zebaa
22nd Aug 2020 11:29

I will try and be helpful. You have a choice; you either pay someone qualified to give an answer giving them the full facts, or you DIY it. If you are going to DIY it here is some reading.

https://www.gov.uk/government/collections/self-assessment-helpsheets-emp...

If you have questions about BIK come back later with a clear question & full facts.

I hope that helps.

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Replying to zebaa:
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By whyowhy
24th Aug 2020 14:18

zebaa wrote:

I will try and be helpful. You have a choice; you either pay someone qualified to give an answer giving them the full facts, or you DIY it. If you are going to DIY it here is some reading.

https://www.gov.uk/government/collections/self-assessment-helpsheets-emp...

If you have questions about BIK come back later with a clear question & full facts.

I hope that helps.

Hardly a helpful response. Get over yourself, you're only an accountant.

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Replying to whyowhy:
Stepurhan
By stepurhan
25th Aug 2020 09:31

whyowhy wrote:

Hardly a helpful response. Get over yourself, you're only an accountant.

Seems to me that advising paid for specialist advice and providing a link to the relevant factsheet is helpful.

You on the other hand have not offered any help at all. If you think you can be more helpful, why not do so instead of criticising others.

I cannot help noticing your profile indicates you too are "only an accountant". Do you not value your own profession?

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Ivor Windybottom
By Ivor Windybottom
24th Aug 2020 14:44

Is National Minimum Wage an issue here?
I'd hate the Catholic church to break the law.

Tax Returns are only required if a liability arises, but you need to look at the special rules for special people as mentioned by the other posters.

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Replying to Ivor Windybottom:
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By matttaxnpayroll
25th Aug 2020 16:37

I don't think NMW applies to an office holder, so I think they're OK on that point. Also they're not employed by the Church.

Re. the tax returns, the special rules don't seem to give a practical answer, e.g. the regular income would be taxable but is well below the PA so there's no liability, they're not self-employed for tax so why need a TR?

Just to muddy the waters, the Minister of Religion pages ask for figures from the P60 - they don't have one, as they're not employees, but should they set up a DPNI scheme and produce one themselves? There wouldn't be any liability from the DPNI scheme so is it necessary? Everything I find about it seems to take me back round in a circle.

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By SteveHa
25th Aug 2020 15:10

Have HMRC issued a notice under S8 TMA 1970?

The answer to your question will be the same as the answer to mine.

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Replying to SteveHa:
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By matttaxnpayroll
25th Aug 2020 16:12

Thanks for your reply. There's not been a notice issued, but they've not registered for SA either. As they're from Nigeria I don't want them to miss doing something which could then invalidate their visa conditions in a worst-case scenario.

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Replying to matttaxnpayroll:
By SteveHa
26th Aug 2020 08:36

If HMRC have not issued a notice to file then there is no S.8 obligation.

Your concern seems to be whether or not there is a S.7 obligation to notify chargeability which, if there is no tax to pay, does not arise.

I don't think that they have anything to worry about.

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