The Church of England has urged the Labour government to secure long-term funding for a key tax relief scheme, warning that hundreds of historic churches face collapse if it's allowed to expire.

The Listed Places of Worship Grant Scheme, which allows churches, mosques and synagogues to reclaim value-added tax (VAT) on building repairs, is set to expire in March 2026 unless it's extended. In January, the Culture Secretary, Lisa Nandy, extended the scheme by only one year, reduced its annual budget from £42 million ($55 million) to £23 million ($30 million) and imposed a £25,000 ($32,600) cap on claims.

The Church of England, which maintains nearly half of the country’s Grade I listed buildings (officially designated as being of exceptional architectural or historic interest), says the scheme is essential for keeping aging religious sites open and active.

Church leaders say the changes, combined with uncertainty over future funding, have already disrupted projects and stalled essential maintenance work across the country, The Telegraph reported.

Archbishop of York Stephen Cottrell has appealed directly to Chancellor Rachel Reeves, saying the scheme represents a modest but vital investment in national heritage.

“For more than 20 years, [churches] have relied on the Listed Places of Worship Grant Scheme to give that crucial bit of extra help,” he said. “We urge the government to make the scheme permanent and lift the cap on claims.”

The archbishop also warned that scrapping the scheme would harm the community services that churches provide, including warm spaces in winter, food aid programs and shelters. “In some areas, they are the only public buildings where people can come and gather together,” he said.

The Rev. Marcus Walker, rector of St. Bartholomew The Great in London, said the government benefits from voluntary church fundraising and should not impose extra tax burdens.

So far, the government has not confirmed whether the scheme will continue after March 2026. The Treasury has not commented on future tax policy decisions, saying they are made during fiscal events.

The Department for Culture, Media and Sport has defended the scheme’s value but stopped short of promising its continuation. The department noted that other sources of support, including the National Lottery Heritage Fund, remain available.

In July, the House of Commons Culture, Media and Sport Committee had also called on the government to make the scheme permanent.

Committee Chair Dame Caroline Dinenage said the program was critical to maintaining the U.K.’s religious heritage.

Church Times earlier reported that the scheme had been a “lifeline” for religious institutions since it was introduced in 2001, and quoted the archbishop of York as saying that only about 27% of churches might remain open within five years if the policy environment did not change.

At the “Great Expectations” conference hosted by the National Churches Trust in October, Cottrell told attendees that churches were “incredibly anxious” about the future of the grant. He called for the government and the Church of England to work in partnership to sustain places of worship and the social programs they deliver.

Church House data shows that more than 100 Anglican churches and cathedrals are currently engaged in repair projects that exceed the £25,000 cap. Among these, at least 38 initiatives are valued at over £2 million ($2.6 million), and 41 are multi-year efforts that depend on reliable long-term funding.

The government said 94% of past claims under the scheme were below £25,000, with 70% under £5,000 ($6,500). However, church officials say that ignores the urgent needs of many historic buildings requiring more costly interventions.

As of Nov. 11, just over £11.4 million of the £23 million budget for the 2025–26 period had been used, and about £583,000 worth of claims were in progress. Roughly £11 million remained available, according to the Department for Culture, Media and Sport’s grant tracker.

A Savanta poll conducted for the Church of England found that 59% of British adults favored government support to help churches pay for repairs, and 77% considered historic churches and cathedrals to be national treasures.

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