10 FAQ’s about Chancel Tax

What is it and when did it originate ?

A tax levied onto a property by the Church.  Back in the late middle ages up to the 19th Century.

Why did it originate ?

Usually on property or land holdings that were once Glebe or Church owned lands.  As and when the land was sold off, the monies enabled the parish church estate to pay for any required repairs.  Many monastries became the “Rectors” of their parishes.  When Henry VIII disposed of the monastries after the reformation, the land sold often retained the liability of the Rector to repair the chancel of the church. This obligation often carried down through the ownership of the land.

What is the likelihood of the property I am investigating being affected?

If it was on land that was owned by the church, was close to the church or was gifted by the church, then it is possible.

The most famous case in recent times was regarding an unfortunate couple near Stratford upon Avon who had to fund a repair and pay the costs of the legal challenge – a cost of nearly £500,000.

How do I know if the property I am investigating is affected by chancel tax?

A detailed search of any old deeds is required.  It may not be possible to find information in the deeds that are available.  You would still be liable even if you searched and there was no evidence of the covenant or deed in all the paperwork that you examined.  It may be possible in some circumstances for the liability to be passed back to the vendor.

What if I do not know if it is affected – what can we do?

The only practical thing to do is take out insurance

How much will this cost?

This will vary according to the underwriters’ opinion but typically this may be in the region of £100 to £200.

How long will this last for?

The liability will last for ever and the insurance will last for as long as the policy states.  Most state a finite number of years.

Where do I get the insurance for Chancel Tax Protection from?

Via your solicitor or alternatively via a search on the world wide web which will lead to a number of insurance brokers and companies offering insurance schemes.

What can we do if we live in a property and that is affected?

The choices are either:

  • Sell the property,
  • Negotiate a deal with the diocese to be released from the obligation,
  • Pay the obligation.

Isn’t the Law going to change ?

Yes. The Land Registration Act 2002 (http://www.legislation.gov.uk/ukpga/2002/9 ) states that all Properties subjected to the charge of a “Lay Rector” or “Chancel Tax” will have to have the liability registered at the Land Registry by 13th October, 2013.  After this date, only properties with this liability registered at the Land Registry will be liable.

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