ACAT Newsletter June 2025

It is a well-worn cliché that the older you are, the faster time seems to fly. Summer has officially begun. The end of June looms large, and we are halfway through 2025.

For many of our churches, that will mean mid-way through the financial as well as the calendar year. However, for others, the financial year may have either just begun or be coming to a close.

Regardless of where we are in your church’s financial cycle, it is a reasonable assumption that we will face a few challenges, whether balancing budgets or assessing future plans.

Structured reflection as a group of church trustees can be an extremely useful exercise. A time to stand back, take stock, identify issues, financial or organisational, which need to be addressed.

With that in mind, this month’s Newsletter, we hope, will provide ‘food for thought’ and perhaps a few new ideas to work on.

What’s new
- Could you be the next ACAT board member
- ACAT Conference 2025 – Gather. Learn. Be Encouraged.
- Charity Annual Return 2025 – Guidance
- Charities Statement of Recommended Practice – Consultation
- Company directors – Identity Verification (IDV) changes
- Trustee information: a reminder from the Scottish Charity Regulator
- National Churches Trust survey: a reminder
- Risk assessment and its place in a church
Points to Ponder
- The Church continues to grow
- Faith in Later Life – Supporting our more senior church members
- TV treks prompts parishes to go on pilgrimage
- Ethical Investments – Are we concerned where Banks and Pension Funds invest our money?
Helpline Q&A
- Savings and reserves
- Wind turbines and oversail agreements
- Accounts prepared on a Receipts and Payments basis, but the income threshold is exceeded
Also of Interest
- Government Spending Review – How it might affect our church members
Partners in Ministry
- CAF Bank
- National Churches Trust
- Ecclesiastical
- easyfundraising
- ACIE – Conference
Summer Training Programme
Charities Engagement Team – Upcoming webinars
Final Thought

God bless,

Ashley Ellis
ACAT Executive Officer

Company directors – Identity Verification (IDV) changes

With effect from 8 April, an estimated 7.2 million individuals who are directors and/or people with significant control of companies or entities registered with Companies House will need to have their identities verified.

Identity verification of company directors and officers is a key part of the Economic Crime and Corporate Transparency Act 2023. Anyone setting up, owning, or controlling a company or limited liability partnership in the UK will need to verify their identity to prove they are who they claim to be.

This will include Directors and Trustees of charitable companies.

The new requirements will be phased in

From 8 April 2025, individuals will be able to verify their identity on a voluntary basis.

However, the Economic Crime transition plan for Companies House has indicated that mandatory identity verification is expected to be enforced during autumn 2025 for all new incorporations.

There will be a 12-month transition period for existing individuals, who will be required to complete identity verification by the due date of their confirmation statement. At this stage, current directors must provide IDV by spring 2026.

IDV can be carried out in two ways:

Directly with Companies House
Authorised Corporate Service Providers (ACSPs)

As noted above, if your church or charity is registered at Companies House, IDV will be required for all directors and trustees.

Faith in Later Life – Supporting our more senior church members

According to the 2021 Census approximately 27.5 million people described themselves as Christian with an average age of 51. This contrasted sharply with the overall population average age of 40.

Over the past ten years whilst the population average age has only increased by one year, that of those identifying as Christian has increased by six years.

Church of England statistics show that 36% of their membership is aged over 70 – a 10% increase over recent years.

While generalisations are dangerous and there are notable exceptions, the inescapable conclusion is that the average age of our church membership is increasing.

This begs the question:
How do we pastorally and practically support our more senior church members on their continuing journey of faith in their later years?

Most churches will centre their “Faith in Later Life” ministry around:

Lunch Clubs / Drop in cafes
Care Home Services & Visits
Midweek Services
Discipleship Groups

However, while these aspects of ministry are vital, the needs of our elderly members may go deeper.

The charity Faith in Later Life, which is “dedicated to inspiring and equipping Christians to reach, serve, and empower older people everywhere, through the local church,” offers articles that explore deeper and often more personal areas, including:

Supporting those who find themselves being a carer to a spouse/partner/loved one
Social gatherings specifically for dementia sufferers
Awareness of members with financial challenges verging on poverty
Neighbour awareness
Encouraging discipleship and spiritual growth irrespective of age.

TV treks prompts parishes to go on pilgrimage

The notion of pilgrimage is not new. However, in recent years, the idea of “pilgrimage” has increased in popularity.

In very simple terms, “a pilgrimage is a journey to a holy place, which can lead to a personal transformation, after which the pilgrim returns to their daily life.” https://en.wikipedia.org/wiki/Pilgrimage

During the Easter period, Pilgrimage, on BBC One, witnessed millions tuning in to follow celebrities from various faiths trekking together, dealing with the challenge of long arduous days walking and discovering more about themselves and their companions.

Pilgrimages can take many forms. Church of England parishes have traditionally walked around the boundaries on Rogation Sunday, which this year fell on 25 May. Rural congregations would walk into the fields around the parish to bless agricultural tools and the land, usually on Plough Sunday in January.

Prayer walks have also become a feature of church life among all denominations.

Local short pilgrimages/prayer walks are a way of connecting with the local community in which our churches are situated. On a personal level, it is a way of meeting people, talking to them, letting them know that the Church in their community is their Church.

On a greater scale, there are some 250 pilgrimage routes with over 700 potential destinations listed by the British Pilgrimage Trust. The destinations range from quiet healing springs to majestic cathedrals and centre on such issues as healing, bereavement, a search for deeper meaning to life or simply as an inspirational journey among wonderful countryside.

Many people find these experiences spiritually enriching. When was the last time you went on a pilgrimage, and what impact did it have?

Savings and reserves

Q: We have been blessed with having some money that we do not need at the moment, so we would like to invest it, but I have been surprised to find that many banks do not want to deal with charities, in particular those looking for an account for investment only. So I wondered if you had any suggestions of where to look or have a list of banks we could approach.

A: You will appreciate that ACAT is unable to give financial advice, so our response is broad, and you will have to do your own research. One starting point – perhaps you have already done this – is to enquire at the bank(s) where your church holds a current account.

We understand that it can be difficult to find banks that will take on charities and churches. As an organisation, ACAT is Partners in Ministry with Kingdom Bank and CAF Bank, so we have these links on our website:

https://www.acat.uk.com/news/what-to-consider-when-choosing-where-to-place-your-churchs-deposits-and-reserves/ – a few years old, but a very helpful article

https://www.acat.uk.com/staff_and_partners/kingdom-bank/ – another link

https://www.acat.uk.com/news/acat-welcomes-caf-bank-as-one-of-our-new-partners-in-ministry/ – introduction to CAF Bank

There was an article in our April newsletter from CAF Bank entitled “How do you structure your church’s finances?”. These are similar ideas to the Kingdom Bank article above, but worth reading – here is a link to the CAF Bank website, or alternatively, look back at our April newsletter:

https://www.cafonline.org/services-for-charities/resources/financial-planning/how-do-you-structure-your-charity%27s-financial-resources

Wind turbines and oversail agreements

Q: I would be grateful for some guidance about whether or not our charity may become liable for tax. Our church, in Scotland, is situated adjoining a roundabout. Windfarms are being developed in this area and the developers cannot transport the wind turbine blades around the roundabout without passing through our airspace, above a flat roof. This is referred to as ‘oversail’, which they are not permitted to do without our consent.

An Oversail agreement was entered into in 2022 with one developer. They were granted a five-year option to enter into a 35-year lease with an option to extend for a further 35 years subject to paying a further premium. The option fee paid was £2,500. If they exercise the option, the lease premium is £30,000 and the annual rent £5,000.

We are now in discussion with three more developers who want oversail agreements and the agent acting for us advises that the payments now available are significantly higher, possibly four times as much.
Although a lease would be granted, the rights granted under the lease are very limited and the church’s rights are basically to carry on as normal. The lease is just a vehicle for granting access to our airspace. One draft agreement defines the lease area as the size of a postage stamp.

As granting such rights are outwith the charitable objectives of the church, are we still exempt from income tax and CGT? The incomes that we might receive are not linked to the windfarms’ outputs, so perhaps not a trading receipt.

If our receipts in any one year exceed the VAT registration threshold, would we have to register and charge VAT?

A: This is an interesting enquiry. I have good news for you – my understanding is that no action is necessary on income tax (I assume you mean Corporation Tax), CGT [Capital Gains Tax] or VAT. The income should be treated as charitable income as it arises from the ownership of land and buildings. Here is one link https://www.charitytaxgroup.org.uk/tax/income-corporate-taxes/income-from-land-and-property/ – you should read the whole webpage:

“A charity is exempt from tax on income arising in respect of rents or other receipts from land or property that it holds for charitable purposes insofar as the income is applied for charitable purposes only. This exemption includes, for example, rental income. The exemption does not generally extend to income derived from additional services such as catering or conferencing activities.”

Several years ago, colleagues gave this answer to someone who had a mobile telecommunications mast installed on their church tower:

“The licence fee received by the church is rental and is therefore not counted as trading income. There is therefore no tax liability for the church in relation to this.”

As for VAT, transactions involving land and buildings are exempt from VAT, but please see this guidance https://www.gov.uk/guidance/vat-on-land-and-property-notice-742#overview

1. Overview

1.1 What this notice is about

This notice explains when transactions involving land and buildings are exempt from VAT. You may also need to refer to Opting to tax land and buildings (VAT Notice 742A).

The land law in Scotland differs in many ways from that in England and Wales. Scottish land law terms (VAT Notice 742/3) may help you to understand these differences.”

As you are based in Scotland, you may need to look at VAT Notice 742/3 but this seems to consist of definitions. VAT should not be chargeable on this sort of transaction.

As you are involved in legal contracts, it is always our recommendation to seek suitable legal advice if you aren’t already doing so. [The church confirmed that they have and are obtaining suitable advice, and this is paid for by the developers of the windfarm!].

You should also notify your insurance company of these arrangements.

Accounts prepared on a Receipts and Payments basis, but the income threshold is exceeded

Q: In 2023 the accounts were completed on receipts & payments basis, so no accruals.
In 2024, because of grant donations towards the end of the year our income has exceeded £250K so the accounts need to be on income & expenditure [accruals basis] so need to include accruals. This means I will have 13 months of gas & electric charges + 15 months of payments to HMRC as we pay quarterly.
Do I just prepare 2024 including accruals & make a note to this effect or is something else needed.

I joined the training course for larger churches you ran in February, which I found very helpful, but I am still confused regarding the change of accounting method.

A: Let’s be honest, moving from Receipts and Payments accounts to Accruals Accounts will involve some work to get them on the new basis. In addition, once your income (as defined) exceeds £250k, then your Independent Examiner [IE] needs to be qualified (see below).

There are two possibilities that we can suggest that may enable you to continue with the status quo.

First, it is important to note that, for the purposes of these thresholds, there is a definition of ‘income’. The Charity Commission have this simple definition for accounts prepared on a receipts and payments basis:

Gross income is the:

total receipts recorded in the statement of accounts
minus any endowment received in the year, as this is unavailable for spending
add any amount transferred from endowment funds into income funds during the year, as these are now available for spending
minus loans received during the year
minus proceeds from sale of fixed assets and investments

If you are able to hold some of your income e.g. grants, over to the following year by treating this as endowment income, will this course of action allow you to remain under the relevant threshold?

Second: if the increase is a genuine one-off, then the Charity Commission may grant you a dispensation from moving to Accruals Accounts and also from having to ensure that you have a qualified IE. If you decide to request a dispensation, please use this webpage: https://forms.charitycommission.gov.uk/. However, in answer to this particular church, we can see the past accounts online (Charity Commission search); as there is an upward trend in income, which is the key factor, the Charity Commission may take some persuasion.

If you are unable to use either of the possibilities shown or would prefer to move to an accruals basis, then your IE must be ‘qualified’ and meet the requirements specified. They can be found in our handbook online https://www.acat.uk.com/handbook/chapter-11-independent-examination/:

Regarding your specific question, “Do I just prepare 2024 including accruals & make a note to this effect, or is something else needed?”; accounts regulations require that you re-state the previous financial year for comparison purposes. You will have to adjust the accounts so that you only have 12 months of gas and electricity and four quarters of HMRC PAYE etc. There are two websites that we can give you that may help you with the move from Receipts and Payments accounts to Accruals Accounts, if you decide (or have to) go down this route:

https://www.churchofengland.org/resources/clergy-resources/pcc-accountability-guide/chapter-9 (A Church of England resource, but I am sure it gives good assistance to churches of other denominations or none)
https://www.accaglobal.com/uk/en/technical-activities/technical-resources-search/2024/September/tf-Conversion-cash-accruals-accounting-charities-the-key-considerations-charity-trustees-those-helping-them-make-switch.html (This link from the ACCA gives you a pdf sheet – it’s designed more for accountants, but it does remind us to say that your Independent Examiner or some other ‘expert’ may be able to assist you with the process, if you are unsure)

Finally, there are big differences between Receipts and Payments accounts and Accruals Accounts. The terminology is quite different, as explained in this ACAT resource, Terminology that distinguishes Accruals accounts from Receipts and Payments accounts – ACAT *login required. When preparing Accruals Accounts, one must follow the SORP [Statement of Recommended Practice] – this is found here https://www.charitysorp.org/download-a-full-sorp, but a charity can customise the SORP https://www.charitysorp.org/customise-your-sorp to save reading some of it. There is, of course, more in our handbook https://www.acat.uk.com/handbook/chapter-6-basic-accruals-accounts/.

Government Spending Review – How it might affect our church members

Chancellor Rachel Reeves’ Spending Review, announced today (11 June), set out the government’s spending plans until 2030.

It may be a generalisation, but one that is broadly accurate, many commentators suggest recent budgets have not significantly eased the financial challenges faced by those on lower incomes, if at all. The prevailing view of the proposed changes is that any benefits will be gradual and dependent on sustained economic growth over the next five years.

Setting aside the additional £29 billion per year in funding for the NHS and the projected boost to Defence spending, most church members will be asking the question: “How will all this affect my personal finances?”

The key points may be summarised as follows:

Whilst public sector jobs may be cut, the proposed investment in the new Sizewell C nuclear plant is anticipated to create at least 10,000 direct jobs, and many more in connected industries. Those living in Leiston, Suffolk, the immediate area where the new plant is to be built, should see increased employment opportunities.
Increased employment could also result in a stronger local economy.
From 2026, free school meals will be extended to pupils whose parents are in receipt of Universal Credit.
The £3 bus fare cap on most journeys will continue until March 2027.
Winter fuel payments will be restored for most pensioners. Households with annual incomes of £35,000 or less will receive £200, or £300 if one member is aged over 80.
£39 billion has been earmarked for new affordable social housing over the next ten years, with the government reiterating its commitment to build 1.5 million new homes by 2030.

On the negative side, council tax bills are likely to increase to help fund proposed improvements to parks, youth facilities, swimming pools, and libraries.

It is unlikely that church members will see an immediate transformation in their finances and living standards. However, the restoration of the winter fuel payment will be of significant help.

Churches providing a ministry to the elderly through drop-in cafés, warm spaces, and social activities—as well as continuing to support their local food banks—will remain a mainstay of their communities.

CAF Bank

CAF Local Giving Report

The Charities Aid Foundation has produced its 2025 Local Giving Report, which looks at the geographical areas in the UK and their respective charitable giving. This research has been conducted over several decades, encompassing various electoral wards.

It also seeks to encourage those who can give more to support the more deprived areas of the country and, in so doing, improve society’s overall social fabric.

A short summary of the results of the report based on 2024 charitable giving statistics is as follows:

Across the UK people donated an average of 1.1% of disposable income to charity in 2024
Sheffield, Hallam was the most generous constituency in the country donating on average 1.9% of disposable income to charity
The most affluent areas of the country (mostly in London) were the least generous donating only 0.5% of disposable income to charity.
In the UK’s four countries total charitable donations were,
- Scotland donated £1 billion
- Northern Ireland £479 million
- Wales £645 million
- England £13.2 billion
The highest average monthly donation per head was in Northern Ireland, £30.
St Davids, Pembrokeshire, was the most generous city per head.
Kingston-upon-Hull is the least generous city per head.

This is a fascinating report, very readable and a challenge to all of us who perhaps are able to provide a little more charitable giving, to do so.

Rethinking Charity Finance: what’s holding us back?

Borrowing to fund growth is common in the commercial world – but is it something churches are reluctant to explore?

Taking out a loan to finance a project or “kick start” a ministry initiative can enable development while fundraising catches up to repay the loan.

Those of us with experience in financing capital projects may approach church-related borrowing more cautiously.

The Charities Aid Foundation has published a helpful guide exploring the role of borrowing in enabling charity growth. You can access it via their website.

Ecclesiastical

Fundraising Support for Churches

Funding church and community projects is a constant challenge. The need often outweighs the resources available.

Ecclesiastical, part of the Benefact Group, offers a Practical Fundraising Hub designed to make fundraising less stressful and more successful. The hub is built around four key steps:

Where to start
Researching donors
Making the ask
Saying “thank you”

Each step includes practical tools and clear guidance to support your church’s fundraising journey.

A free webinar hosted by Benefact Group and the Directory of Social Change takes place on 3 July 2025, 10–11:30 a.m.—a great opportunity for further insight.

For those seeking grant funding, Benefact Trust, also part of the group, may be the place to start. The Trust supports church and community-focused projects, especially in deprived areas.

In a short podcast, Andrew Bass, Senior Grants Officer, offers expert advice on successful grant applications. He covers:

Who can apply
The projects eligible for funding
What churches may need to contribute

Preparing a grant application takes time—and getting the details right is key. This 12-minute episode is available on YouTube.

Welcome, Guest

ACAT Newsletter June 2025

ACAT’s Newsletter

Final Thought

Thank you for your support!

ACAT Newsletter June 2025

ACAT’s Newsletter

ACAT’s Newsletter

What’s new

Could you be the next ACAT board member

ACAT Conference 2025 – Gather. Learn. Be Encouraged.

Charity Annual Return 2025 – Guidance

Preparing for the new SORP

Company directors – Identity Verification (IDV) changes

Trustee information: a reminder from the Scottish Charity Regulator

National Churches Trust survey: a reminder

Risk assessment and its place in a church

Points to Ponder

The Church continues to grow

Faith in Later Life – Supporting our more senior church members

TV treks prompts parishes to go on pilgrimage

Ethical Investments – Are we concerned where Banks and Pension Funds invest our money?

Helpline Q&A

Savings and reserves

Wind turbines and oversail agreements

Accounts prepared on a Receipts and Payments basis, but the income threshold is exceeded

Also of Interest

Government Spending Review – How it might affect our church members

Partners in Ministry

CAF Bank

CAF Local Giving Report

Rethinking Charity Finance: what’s holding us back?

National Churches Trust

The National Churches Survey: giving every church a voice

Ecclesiastical

Fundraising Support for Churches

easyfundraising

ACIE – Conference

ACIE Scotland and N. Ireland Conference

ACIE UK-Wide Online Conference

Summer Training Programme

Charities Engagement Team – Upcoming webinars

Did you know?

Final Thought

Thank you for your support!