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HMRC internal manual

PAYE Manual

PAYE operation: specific employments: clergy and ministers of religion

Free Churches

Cases of difficulty

Report any case of difficulty to the Solihull Technical Helpline: (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

Church of England


Ministers of the Church of England are office holders and the guidance to follow is within the Employment Income Manual at EIM60001.

The Church Commissioners for England are paying agents for clergy and operate PAYE on stipends and periodical payments made to certain ministers under the Ordination of Women (financial provisions) Measure 1993. This periodical compensation payment is made to clergy who chose to resign when the Church of England began to ordain women.

  • Fee income received for conducting weddings, funerals and so on can be legally assigned to a Diocesan Board of Finance therefore it does not need to be considered for coding purposes. When fees are assigned in this way a Deed of Assignment will be produced
  • Any income not legally assigned is received gross. Ministers are therefore liable on these receipts and they should be treated as any other earnings
  • The value of living accommodation provided to a Minister is normally exempt (refer to EIM11351)
  • A Service Benefit is the term commonly used to describe the benefit for taxation purposes arising on payments made to clergy, without deduction of tax to cover expenditure incurred on heating, lighting, cleaning and garden upkeep (HLC)
  • Where Minister’s emoluments are paid at a rate of £8,500 per annum the Service Benefit payment (HLC) is taxable, subject to a maximum of 10 per cent of the net income from the ministry income (refer to EIM11522). The amount taxable is therefore the lesser of the amount of the HLC payments received (as reported on form P11D) or 10 per cent of the net income from the post in the year
  • Property repairs and furnishings at the Minister’s residence are normally paid for by the Church as they are the property owners. For any expenses paid by the Minister, see the bullet below
  • Most Ministers incur expenses in carrying out the duties of their office. Refer to EIM31620 onwards for general principles. However, Ministers also have their own special legislation dealing with deductions for expenses in section 351 ITEPA 2003. Refer to EIM60040 onwards for additional allowable deductions
  • SAM100060 onwards provides further information on Self Assessment criteria

Retired Ministers

The Church of England Pensions Board pay pensions to retired Ministers and the Church Commissioners for England remain the paying agent.

Ministers often receive fees in retirement for weddings, funerals, services and so on. This income does not amount to a trade or profession carried out on a commercial basis. It is taxable as Miscellaneous income under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 and should be coded out where possible.

Church of Ireland

Operate the Direct Payment procedures for Church of Ireland clergy following the guidance in subject ‘DPNI scheme - direct payment (Tax and NIC)’ at PAYE20100. The amount of income is returned

  • By the Representative Church Body on cards 46(RCB)
  • By diocesan secretaries on cards 46

This information is circulated to the correct offices.

The responsible office should obtain a return on card 46 from each parochial treasurer.

Church of Scotland


Ministers of the Church of Scotland hold offices. However, they are not in employment, so in any conversation or official communication you should avoid the words employer, employed or employee. Unless you receive specific objection you need not amend forms P14.

The Church and Ministry Department operates PAYE on stipends and any

  • Income arising from the invested proceeds of sales of glebe
  • Payments of occupier’s rates on the glebe by Kirk Sessions
  • Endowments and bequests.

You should code out any other sources if possible.

Assistant ministers

The local church treasurer operates PAYE on payments to assistant ministers who are employed by the local congregation.


Payments to locums are not necessarily made by the Church and Ministry Department. The local church treasurer may pay part or all of the remuneration. Where a church has a locum you must

  • Issue a code notification to either or both payers of remuneration
  • Give the correct allowance as expenses in the minister’s coding where part or whole of the locum’s remuneration is a charge on the minister’s earnings.

Retired ministers and missionaries

Payments to retired ministers and missionaries are usually made quarterly, with some half yearly payments.

Translations (transfers)

Ministers may be translated (transferred) from one church to another. If the Church and Ministry Department pays the minister, a payment after going to the new church is also made to cover the period from the date of the last due payment to the date of leaving.

You need not take any special action where the same Deductions Working Sheet continues in use.

But watch for cases where the Church and Ministry Department

  • Starts a fresh Deductions Working Sheet for the new church
  • Are not the paying point for the new church.

The payment should be entered on the old Deductions Working Sheet and tax deducted on the Month 1 basis.

Supply ministers

Payments to supply ministers who cover until the vacancy for a new full time minister is filled are made by the Church and Ministry Department. If no Deductions Working Sheet is held, the Department pays the minister in full.

Church in Wales

Cardiff Group deals with all incumbents and pensioners of the Church in Wales.

The Representative Body operates PAYE on stipends, annuities and such additional items as

  • Payments of interest on private endowments given or bequeathed in trust
  • Exceptionally, income from local endowments of which the Representative Body are not trustees.

Code out any other sources if possible.

Episcopal Church in Scotland

Bishops and diocesan curates are paid wholly by the diocesan treasurers. Deans, rectors, parish curates, lay preachers and home missionaries are paid wholly by the vestry treasurer of the church to which they are attached.

For PAYE purposes, the diocesan or vestry treasurer is the employer and normal P45 procedures operate.

The Representative Church Council pays pensions and grants from

  • The Aged and Infirm Clergy Fund
  • The Clergy Widows and Orphans Supplementary Fund

Free Church of Scotland

Ministers of the Free Church of Scotland are paid monthly from Central Office and normal P45 procedures operate on a change of minister.

A few ministers receive supplementary payments from the Deacon’s Court of their respective churches. You should code out these payments unless they exceed the basic personal allowance, when you must have a secondary source record.

Methodist Church

These instructions apply only to ministers of the Methodist Church in Great Britain. Belfast Group issues instructions about Methodist ministers in Northern Ireland.

  • Send Deductions Working Sheets for Methodist ministers to the circuit steward. Obtain the address from the superintendent minister of the circuit

In some circuits, the tax on the minister’s stipend is paid out of circuit funds. Where this happens, follow the guidance in subject ‘Free of Tax Payments’ PAYE72025.

  • Code out either of the following if a minister receives them

    • Maintenance grants in respect of children - these are paid direct to the minister by the Children’s Fund Committee
    • Additional preaching fees
  • Do not assess any payments in respect of chaplaincies held by Methodist ministers separately, if they are put into general circuit funds out of which stipends are paid

Ministers generally change circuits on 1 September and the normal P45 procedure operates.

Presbyterian Church in Ireland

Belfast Group issues instructions about ministers in this church.

Presbyterian Church of Wales

Cardiff Group deals with all ministers of the Presbyterian Church of Wales. Ministers are paid

  • A stipend from the Presbyterian Church of Wales Sustentation Fund


  • In some cases, additional remuneration from the church treasurer

Code out, where possible, any fees from services not in the minister’s charge which are paid direct to the minister by treasurers of the churches concerned. If you cannot code them out, deal with them through Self Assessment.

United Free Church of Scotland

Ministers of the United Free Church of Scotland receive the whole of their remuneration from either the Central Office or the local church treasurer.

The payer is the employer and the normal P45 procedure operates.

United Reformed Church

Manchester Group deals with the majority of ministers of the United Reformed Church. Ministers receive

  • A stipend from the Maintenance of the Ministry Fund
  • An additional sum from the local church treasurer

PAYE is operated on both sources by the United Reformed Church.

The normal P45 procedure operates only if the stipend from the Fund ceases and not if a minister moves to another church.

Jewish faith

Obtain the name of the person or body paying the stipend from the rabbi. Send code notifications and accompanying documents to the Synagogue.

Roman Catholic Church

In England and Wales Roman Catholic Clergy are dealt with by Edinburgh Group, where the church income is the main source.

Otherwise, use the Direct Payment procedures on the official income of Roman Catholic Clergy. Follow the guidance on PAYE Direct Payment at PAYE20100.

Apply PAYE procedures to earnings from any other appointments. If this income is paid into parochial funds use code NT, as the priest is not liable to tax on the payments as income.

Salvation Army

The Salvation Army pays allowances to its officers according to their marital status and payment can include a supplement for children.

Payments to wives

The wife of a Salvation Army officer is paid part of the allowance made to married officers and such payments are treated as her income.

If the allowance paid to the wife is above the PAYE threshold, the Salvation Army should

  • Inform the husband’s HMRC office, giving the wife’s name and National Insurance number
  • Use the emergency code on a cumulative basis

You should set up a primary source record for the wife showing the code used by the Salvation Army.

Contributions towards officers’ costs

The Salvation Army also pays a fixed contribution towards the cost of heating and lighting premises occupied by all officers.

If these contributions exceed the actual cost, the Salvation Army enters the excess on the Deductions Working Sheet and taxes it accordingly.

This scheme does not cover employees of other companies operated by the Salvation Army, for example Salvationist Publishing and Supplies Ltd.