Tax Consultant Carter Backer Winter
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Tax exemptions for religious leaders

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
Tax Consultant Carter Backer Winter
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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. 


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). 

The HMRC Employment income manual (EIM60027) includes a concession to allow the minister to even out earnings from Easter offerings if two Easter festivals happen to fall within the same tax year.


Ministers can only benefit from a deduction from earnings for expenses, if the cost is the wholly, exclusively and necessarily in the performance of duties of their employment (s.336 ITEPA 2003). There is also a specific section dealing with expenses of ministers of religion (s.351 ITEPA 2003). 

Section 351 enables ministers to deduct a proportion of rents from earnings. It’s available where part of a dwelling-house is used mainly and substantially for the purpose of their duties. The HMRC employment income manual (EIM60048) provides that a proportion for heating, lighting and cleaning expenses can also be deducted.

Maintenance, repair, insurance or management of a premises could partly be deducted from earnings, if those expenses are incurred by the minister on a property which has been provided to a minister by reason of employment and in order to perform the duties of the employment.

Examples of expenses within the HMRC guidance include travel expenses, books, repair or replacement of robes and supply of wine for communion.

It is worth noting that deductions from earnings usually cannot exceed earnings and therefore cannot create an employment loss. However, where s.351 ITEPA 2003 applies no restriction applies for deductions from earnings (see s.329(4) ITEPA 2003).

Job-related accommodation

The HMRC employment income manual specifically states that clergymen and ministers of religion provided with living accommodation will be exempt from the value of that accommodation being treated as earnings, if the individual is able to demonstrate:

  • the accommodation was provided for the better performance of the duties of the employment; and

  • the employment is one of the kinds in which it is customary for employers to provide living accommodation. 

Clergymen and ministers will also be able to benefit from tax exemptions on certain expenses linked to the job-related accommodation, paid for or reimbursed. These include repairs, alternations and additions to the premises, council tax, water charges and sewerage charges. 

In addition, there is a further exemption for; heating, lighting and cleaning premises, repairs and maintenance or decoration and the provision of furniture, equipment or other items which are normal for domestic occupation. For these expenses or reimbursements, the taxable benefit will be limited to 10% of net earnings less any contributions made by the individual (s.315 ITEPA 2003).

Council tax and water charges 

Individuals employed full-time as a minister of a religious denomination will not be subject to income tax on certain payments or reimbursements. Amounts exempt will be linked to a qualifying property and can include reimbursements of a statutory deduction (council tax and water charges). A qualifying property is one if an interest in it belongs to either a charity or an ecclesiastical corporation and has been provided to a minister by reason of employment and in order to perform the duties of the employment. 

The employment income manual (EIM60009) provides a list of properties that will not qualify (s.290 ITEPA 2003).

Lower paid ministers

According to the Office for National Statistics, the average hourly pay for employees by religious affiliation in 2018 was £11.20 (average annual salary £21,000). An individual will be a lower paid minister if they are directly employed as a minister of a religious denomination and the earnings rate for the employed is less than £8,500 for the tax year (s.290A – s.290G ITEPA 2003).

A lower paid minister will not be subject to PAYE income tax or NIC for the following:

  • Payments or reimbursements of certain accommodation expenses relating to qualifying premises, such as heating, lighting or cleaning. 

  • Allowances paid to a minister for certain accommodation expenses relating to qualifying premises.

  • Chapters of ITEPA 2003 within the benefits code: chapter 3 - expenses payment, chapter 6 - cars, vans and related benefits, chapter 7 - loans and chapter 10 - residual liability to charge.

Capital Allowances

Ministers also have the ability to claim capital allowances of plant and machinery expenditure used for their employment, as can officeholders and employees.


The legislation and HMRC manuals fail to use inclusive language to truly reflect the multicultural landscape of the UK. There seems to have been an oversight on updating both to include other religious faiths.

In 2018 the ONS found that 46% of British people have no religion, of the rest who have some religious connection, how many are ‘ministers’ or ‘clergymen’ who could use these tax exemptions? How many more from other religious faiths could be using these exemptions but have felt they did not qualify because of the language applied in the legislation and manuals? 

World Religion Day

With over 4,000 different recognised religions in the world, this day celebrates and encourages interfaith understanding.

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.

Thanks (1)
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.

Thanks (0)
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:

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