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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Ministers of religion: exemption of income: council tax

Section 290 ITEPA 2003

Where certain conditions are met (see EIM60007) council tax paid on behalf of, or reimbursed to, a minister is not treated as employment income of the minister.

Where those conditions are not met there may still be no liability to income tax on the minister in respect of council tax paid for by the church on the accommodation the minister lives in. This is because in certain circumstances local government legislation provides that the council tax liability falls on the church rather than the minister. So when the church pays the council tax it is paying its own liability. There is no benefit to the minister.

The council tax liability can only fall on the church where the dwelling is used by the minister to perform the duties of his or her office. Additionally:

  • in England and Wales the church must be the owner of the dwelling. There is an exception for Church of England ministers where the property can be owned by the minister and the minister will still not be liable for the council tax.
  • in Scotland the dwelling must be the sole or main residence of the minister. It does not matter who owns it.