The Church of England has written to the Chancellor to request an exemption for places of worship in the extension of VAT to alterations in listed buildings, claiming the Budget measure could cost the Church up to £20m per year.

The Church of England is responsible for 45 per cent of all grade 1 buildings in the country, with 12,500 of its 16,000 buildings listed. Many of these are undergoing alterations to make them more accessible, such as providing toilet and kitchen facilities or disabled access, and prior to last Wednesday's Budget, these works had been exempt from the standard rate of VAT.

In a letter to George Osborne on Thursday signed by Rt Revd and Rt Hon Richard Chartres, Bishop of London, the Church advised that the removal of zero-rated status for such works would "be a blow to huge numbers of volunteers who are working to open up their churches to wider community use".

Chartres called for an exemption for places of worship, or if that was not possible, additional funds for the Listed Places of Worship Grant Scheme, which he said "to some extent offsets the VAT payable on repairs on listed buildings", which are not currently zero-rated. The grant scheme was previously given the go-ahead until 2014 and in his Budget announcement Osborne advised that this would be extended, however no additional funds were ringfenced for this purpose.

Chartres said in his letter that "some £22m in VAT liability was incurred by parochial church councils on works undertaken in the community interest last year and they have therefore already had to bear the lion's share".  

A further letter supporting the Church's pleas was sent by Tony Baldy MP, the Second Church Estates Commissioner. He questioned whether the inclusion of places of worship in the measure was "deliberate or an oversight" and added that "for a significant number of MPs, their greatest contact with churches in their constituencies is as a consequence of churches looking for help and support in parishes and communities having to fundraise to maintain and restore church buildings".

Baldy called for a meeting between Chartres, Osborne and himself to discuss the issue.