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General Assembly 2008: Kirk concern re Government legislation "on vulnerable borrowers"

Following new Government tax laws, the Kirk's Housing and Loan Fund, which exists to support retired Church of Scotland Ministers, and widows, widowers, and separated or divorced spouses of Church of Scotland Ministers in need of help with their housing, is extremely concerned at the monetary imposition placed "on vulnerable borrowers".

The Trustees endeavour to provide assistance, by way of either a house to rent or a house purchase loan, to those who have been required to live in tied houses during their Ministry and, in their report to the General Assembly, have expressed dismay at the imposition of a new taxation liability upon those having to borrow from the Fund.

"[We] regret the imposition of a new taxation liability upon retired ministers and upon widow(er)s and ex-spouses of ministers given much needed housing support from the Fund by way of a house purchase loan.

“[We] encourage the Trustees to continue their efforts to persuade the Government to bring in amending legislation under which loans at beneficial rates of interest to retired ministers and their families will be treated as excluded benefits for taxation purposes." (Supplementary Deliverances 2 and 3)

"Commissioners can be assured all this is not of the Fund's making and seems a burdensome complication which is likely to result in relatively insignificant contributions to the Exchequer... and at the huge administrative task falling upon the Fund's limited staff resources." (Supplementary p.2, para 8)

Letters voicing the Fund's concern have been sent to the Prime Minister and the Chancellor, as well as every Scottish constituency MP. The report urges borrowers to enlist the support of their respective politicians to keep up the pressure so that the exemption from benefits-in-kind legislation provided to those in rented housing is extended to those who have beneficial loans.

The new legislation means all those to whom a loan has been advanced by the Fund since 6 April 1998 and all loans granted in the future will incur a tax liability. This is calculated by the difference between the amount of interest paid at the fund@s beneficial rate and a sum calculated by applying to their loan an official rate of interest set by HM Revenue & Customs (HMRC). The charge to tax applies with effect from 6 April 2006. The official rate for the fiscal year to 5th April 2007 is 5% and for 2007/8 is 6.25%

The Trustees will approach HM Revenue and Customs to try and negotiate a bulk settlement of the tax payable for the fiscal year to 5 April 2007. The sum will be met by the Fund.

During the course of 2007, 27 Ministers, 4 widows and 2 separated or divorced spouses were given support. As at 31st December 2007 the Fund owned 249 houses, and has 135 long term loans outstanding totalling nearly £4.2m.

Ends

Note to Editors:

A full copy of the report is available on our General Assembly pages online here.

GANR/26/05/08

Friday 2 May 2008

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