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Tax exemptions for religious leaders

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To mark World Religion Day, Reshma Johar explores the tax exemptions for individuals who receive income for their duties as a religious leader, which is normally taxed as employment income.

15th Jan 2021
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Both the tax legislation and HMRC manuals use either the term ‘minister’ or ‘clergyman’. Both often provide examples involving a church or the Christian faith. Whilst the legislation and HMRC’s interpretations have been drafted to exclude faiths outside of Christianity it should not exclude individuals employed by other religious faiths. 

An individual within self-assessment, who is a minister of any faith, religion or denomination, or an employee acting as a minister of religion, will need to complete form SA102M. I would argue that the below exemptions would be available to leaders in other religious faiths which would also include an Iman for Islam, a Rabbi for Judaism or a Pundit for Hinduism. 

Gifts

Often people holding religious positions receive gifts as part of their role. Earnings can go beyond a salary or wage and so any gifts, which can include cash, received in the course of an employment (such as weddings, funerals etc) is likely to be treated as earnings (assessed under PAYE tax and NIC). 

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Replies (3)

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By SteveHa
18th Jan 2021 08:37

I personally don't see why there should be any concessions for ministers/clergy etc. regardless of denomination. We have a nonsecular Government.

And at the risk of upsetting some, nobody peddling any other myths gets any such concessions.

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By hyper10
18th Jan 2021 11:11

As a non Accountant, I enjoy browsing accountingweb however I disagree with using this forum as a way of claiming a lack of "inclusivity".
Rules on tax are clearly complicated and whether a tax payer claims an allowance or not should not be a reason to look for a hidden agenda.

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By rbw
18th Jan 2021 14:04

"Whilst the legislation and HMRC’s interpretations have been drafted to exclude faiths " seems to me at best economical given e.g.:

a. the legislation does not /exclude/ faiths. It uses "Minister of Religion" which falls to be interpreted like other words and phrases.

b. HMRC state /explicitly/ that "Ministers of Religion" means "a minister of religion of any faith,
religion or denomination" in things like the notes for the Ministers of Religion pages

c. IR invited representatives of other faiths to meetings about the taxation of benefits and expenses last century.

Could more be done to recognise other faiths explicitly? Yes.

Do you need to "argue that the below exemptions would be available to leaders in other religious faiths"? I don't see who you are arguing with.

Now what may be arguable is just who within all the faiths counts as a Minister. I have happily forgotten what I once knew about the nooks and crannies. But a flavour is in this by John Newth:

https://www.accountingweb.co.uk/tax/business-tax/any-answers-newth-talks...

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